RRSP vs TFSA vs Option “C” in 2020

What about the 3rd tax-sheltered option nobody told you about?

We recently developed a tax-optimized wealth strategy for a client and option “C” resulted in $1 million more wealth over the client’s lifetime in after-tax dollars. Restructuring all 3 tax-sheltered accounts resulted in even more additional investment growth.

Below is some information on the value of these 3 tax-sheltered accounts:

RRSP

It is that time of year again, you have the opportunity until March 2, 2020 to still contribute to your RRSP (Registered Retirement Savings Plan) and count towards the previous 2019 tax year.

The RRSP enables you to defer Canadian taxes on investment growth in the account until you withdraw funds, often in retirement.  Also, holding U.S. investments in your RRSP can eliminate the withholding tax that the U.S. government levies on other Canadian investment accounts.  Knowing how to tax optimize a tax-sheltered account and integrate with your investment strategy can help you grow your wealth more efficiently.

Additonal RRSP infomation is available here.

TFSA

A new year, a new decade, and a new opportunity to contribute to your TFSA.  The annual TFSA contribution limit for 2020 is $6000, and if you have never contributed to a TFSA account the max contribution could be $69,500.

The TFSA enables you to eliminate Canadian taxes on investment growth in the account, you can withdraw the funds whenever you want, and withdraws are not taxed making it a very flexible and powerful tool for wealth growth.  There are Canadians with TFSA balances over $1M, how you structure your investments in this account and integrate it in with your overall investment strategy makes all the difference.

Additional TFSA information is available here.

Option “C”

The 3rd tax-sheltered option has been used by wealthy business owners for decades to protect, grow, and transition their wealth.  Unlike the TFSA and RRSP accounts with their limits on how much you can tax shelter, you can invest and tax shelter millions with this option.  There are also additional tax benefits for business owners using their corporation to invest.

If you are interested in learning how you can pay less tax and grow your wealth more efficiently, schedule a 15 minute introduction call via the link below.

Questions?
Contact us with any questions you have, we can provide you answers.

Explore your options in a 15 minute introduction call by clicking here
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