Q&A With Gordon Pape: Contributing To RRSP Before RRIF Conversion

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Should I contribute more to RRSP before converting to a RRIF?

Q – I am age 70, retired, and living on a fixed income. My tax bracket is not forecast to change going forward.
 My question: I have $15,000 in unused RRSP room. Should I contribute the $15,000 prior to converting to a RRIF?
- Steve S.

A – Based on your profile, there is no tax advantage to topping up the RRSP. You’ll get a tax deduction if you contribute but you will pay tax at the same rate when the money comes out. Plus all the investment income you earn in the RRSP/RRIF will be taxed on withdrawal.

If you have contribution room, a Tax-Free Savings Account (TFSA) would be a better choice. There is no deduction when you contribute but neither will you pay tax on withdrawals. Plus all the investment income you earn in the plan will be tax-free.


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