RRIF and TFSA Limit Changes
The federal government has made it easier for seniors and those wanting to save more money. In 2015, the amount was increased to $10,000, but for 2016, the amount was lowered back to $5,500
Also, with RRIF (registered retirement income funds), it will require most seniors to withdraw a lower percentage of their RRIFs each year. RRIFs were not increasing to the same degree, so having the withdraw at a lower rate is helping to maintain the value, and not have it decrease as was happening at times with the previous higher rates.
These new increased contribution limits will mainly be useful for those already maxing out these amounts each year, while allowing for those to invest more into these in the future. Right now approximately 46% of the 1.9 million of those contributing are seniors. Some are opting to use this to help fund a business startup, purchasing a first home, and some are using it to help their kids with university/college.
- The TFSA annual dollar amount for 2009, 2010, 2011 and 2012 was $5,000.
- The TFSA annual dollar amount for 2013 and 2014 was $5,500.
- The TFSA annual dollar amount for 2015 was $10,000
- The TFSA annual dollar amount for 2016 is $5,500
What is a TFSA?
A (TFSA) Tax-Free Savings Account offers tax benefits for saving money. Investment income, as well as capital gains and dividends, earned in a Tax-Free Savings Account are not taxed. Contributions to a Tax-Free Savings Account are not deductible for ones’ income tax. A TFSA may encompass cash and/or other investments such as certain stocks, bonds, mutual funds or (GICs) Guaranteed Investment Certificates.
What is a RRIF?
A (RRIF) Registered Retirement Income Fund is a tax-deferred retirement plan. Individuals use a Registered Retirement Income Fund to create income from the savings accumulated under ones’ Registered Retirement Savings Plan.
