I find myself in a unique position (again), where I’m contemplating making an RRSP withdrawal at the age of 38. Last time I was in this position I ran out of time before making a decision. I was also making some side hustle income and really was still learning the ins ands outs of financial literacy. Therefore, I did nothing and have always wondered if I missed a once in a lifetime opportunity. The scenario is as follows: 👉🏼 Next to $0 income earned in 2026 👉🏼 Remaining TFSA room of ~$30k 👉🏼 Outsized RRSP relative to my TFSA 👉🏼 Remaining RRSP room of ~$120k So, I find myself contemplating whether or not to make a withdrawal from my RRSP in order to max out my TFSA 🤔 I ran the concept through AI and also through my investing chat group, and there’s some varying opinions. The biggest, and possibly only downside in doing this would be losing that RRSP contribution room forever. The upsides would be 1. More flexibility 2. Very little tax implications 3. Letting that income grow in a tax haven with no withdrawal rules later on I’m looking for all the feedback, suggestions, comments, concerns and experiences! Anyone ever do this? Is there something I’m missing here?
Personally, with the details laid out as they are, I wouldn’t hesitate to do so. -RRSP is tax deferred, snd you made almost nothing this year, presumable less than when the contribution was made (to be confirmed by you) - like you said, TFSA is way more flexible. - the only way this doesn’t t make sense is if you think the growth in the RRSP would outpace TFSA by a large enough margin that even considering tax upon withdrawal would have the money inthe RRSP grow larger, but you are free to invest in the same thing as it is currently invested in, so that’s not the case. Losing the RRSP room is the only negative, but again, the deferred tax on said funds makes it less important, especially when you consider that TFSA withdrawals are not taxed and not limited in the withdrawal stage …
le bib@le_bib · 12d
No brainer. Taking out RRSP at 0% marginal is the absolute best outcome possible. And on top of that you have TFSA room. So all future gains on that withdrawal will be at 0% too guaranteed.
JOHN @smartyht · 12d
I would ask my self if I might need the contribution room ... If I'm able to max out the TFSA in the coming years. I would not waste the contribution room.
See the full comment section 👀Sign up for the full Blossom experience!
