Q – This year the value of my Tax-Free Savings Account (TFSA) has grown by $2,000. If I transfer $2,000 from my TFSA to a Registered Retirement Savings Plan (RRSP) before the end of the year, will I get a tax credit for the $2,000 RRSP contribution? Also, will I be able to contribute an additional $2,000 into my TFSA next year? – Mike M.
A – As far as I can determine, there is no mechanism for transferring assets from a TFSA to an RRSP. But there is no need to do that, and no benefit, because TFSA withdrawals are tax-free.
Simply arrange with the company that administers your TFSA to withdraw $2,000 from the plan. Then use that money to make the RRSP contribution. You will be allowed a tax deduction for the full $2,000.
Assuming you do that before year-end, you will have $2,000 in additional TFSA contribution room in 2011. – G.P.
Gordon Pape is one of Canada’s best-known personal finance commentators and mutual fund experts and a regular contributor to the Fund Library. Click here to submit your question to Gordon.
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