Planning, Contributions and Investments-What Are You Waiting For?

The New Year is usually a time of reflection and planning.  With that in mind we would like to remind you that the start of the New Year is generally the best time to contribute to savings plans such as Tax Free Savings Accounts (TFSAs) and Registered Education Savings Plan (RESPs).

This years’ TFSA limit is $6,500 with $88K being the total lifetime amount.  TFSAs have become an important planning tool whose relevance increases each year.

TFSAs are open to any person 18 and older whether you have earned income or not.

You have a wide selection of investment choices, and your contribution room carries forward from year to year.

TFSAs never impact any other form of income on your tax return.  No income tax to pay on interest, growth or dividends from a TFSA. There is no time when you must redeem.

TFSAs allow you to redeem tax free and repay any withdrawals in the following year without penalty. You can rollover your TFSAs to a spouse tax free upon death even if your spouse has maximized their own plan as long as the plan is set up properly.

Also, for families with children don’t forget RESPs.  With college tuition becoming more expensive RESPs are more important than ever.  Each year you get $2,500 of contribution room for each child under 16 and can receive a grant of 20% ($500) of the amount contributed up to a total of $7,200 in grant money per child.  This is essentially free money from the government and an excellent return on your investment.  The ability to earn grant money ends in the year the child turns 16 with some exceptions.  You are able to catch up with as much as $5,000 contributions and can receive up to $1,000 (20%) per child in any year prior to and including the 17^th year as long as contributions were made in previous years.

We strongly urge you to look at both TFSAs and RESPs for you and your family members.  The time is right for you to contribute to your plan.  Please call us to learn how to make this year’s contribution count.

If you have any questions, concerns or just want to discuss your personal situation feel free to book an appointment through our online calendar on our website.