RRSP Withdrawal Rules

[Faith1956]

Hi

I'm 66, retired for 3 years, live in Ontario and have $120,000 in my RRSP. I have $4000 contribution room remaining in my RRSP and have been contributing $50 weekly to my RRSP and plan to continue until all the $4000 room left has been used up.

I also have $60,000 space in my TFSA and I'm considering withdrawing $5000 to $10000 yearly from my RRSP and moving it into my TFSA before I turn 71.

My wife is also retired and with pension splitting we are both in the lowest tax bracket.

Two questions:

1) Does it make sense to move money from my RRSP into my TFSA now instead of at 71?

2) If I withdraw $5000 from my RRSP and in the same year contribute $2600, can I use that $2600 as a tax credit?

Thanks,

Bob

[TurboTaxBrenda1]

While we cannot provide tax planning advice on this,  we can offer you more information to look at and consider. 

1-If you have the room, you can contribute up to your limit, regardless of what you take out. That's the old money that you've already contributed. 

2- If you take out of your RRSP and put in the TFSA, you won't have as high of a "minimum withdrawal amount" to pull out when you're 71 and pay tax on.

3-You will be paying the tax on that RRSP withdrawal either way, but if it can earn more interest "tax-free", why not?

Hope this helps a little! Enjoy your retirement!