Tax-Free Savings Accounts – Are They Right For You? by Jennifer & Andrea Kirby

By Jennifer and Andrea Kirby
Kirby Financial Group

This year will be remembered not only for market turmoil, but also for the introduction of the TFSA, the most revolutionary tool for Canadians to save since the inception of RRSPs.

Why the Tax-Free Savings Account is relevant for corporate women?
With a Tax-Free Savings Account (TFSA), you can invest money in an account that will grow on a tax sheltered basis (you do not have to pay tax on the growth), and you are not taxed when the money is withdrawn from this account.

These accounts are ideal for people who wish to save outside their RRSP for a short, medium or long-term goal. A great benefit to women is the ability to save for a maternity leave. Money inside the account will not only grow tax free but future withdrawals will not be taxed and can be made anytime

Features of the TFSA
* If you are over 18 years old, you can deposit $5000 per year into your account. The over-contribution penalty is 1% per month.
* The $5000 annual contribution limit will be indexed with inflation in $500 increments starting in 2010.
* Un-used contribution room can be carried forward indefinitely; withdrawals can be re-contributed in future years.
* Investments that qualify to part of your RRSP can also be held within your TFSA (eg: stocks, bonds, mutual funds, GICs)
* At retirement, withdrawing from your TFSA won’t impact your eligibility for other government programs (eg: OAS).
* Upon death, the balance of your TFSA can be transferred directly to your beneficiary without impacting their contribution room.

TFSA or RRSP?
The suitability of using a TFSA rather than your RRSP depends on a number of factors:
* Your current and expected tax rate
* Expected withdrawal date
* Your overall financial plan

About Kirby Financial Group
Jennifer Kirby is a Certified Financial Planner, Chartered Life Underwriter and Registered Health Underwriter with a passion for making sense out of complex financial products. She is also a Certified Divorce Financial Analyst. Jennifer has been working in the financial planning industry since 1995 and has a proven track record for helping clients clarify their personal and financial objectives.

Andrea Kirby has an MBA from Simon Fraser University and joined Kirby Financial Group in 2007. Andrea is dedicated to providing clients with candid, up-front advice and excellent customer service. She has been a member of the Social Investment Organization since 2008.

Please contact us anytime if we can help you with creating a financial plan.

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