Saving just got a whole lot easier!
The Tax-Free Savings Account (TFSA) program began in 2009. It is a way for individuals who are 18 and older and who have a valid social insurance number to set money aside tax-free throughout their lifetime. Contributions to a TFSA are not deductible for income tax purposes. Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn. Administrative or other fees in relation to TFSA and any interest or money borrowed to contribute to a TFSA are not deductible.
Some of the Benefits of TFSA
A TFSA allows you to set money aside in eligible investments and watch those savings grow tax-free throughout your lifetime. Interest, dividends, and capital gains earned in a TFSA are tax-free for life. Your TFSA savings can be withdrawn from your account at any time, for any reason1, and all withdrawals are tax-free. And if you want, you can put back the amount you withdraw into your TFSA. However, you have to do it the followingg year so it will not impact your contribution room.
You can withdraw money from your TFSA at any time; however, specific product restrictions may apply (e.g. GIC maturity dates). The amount you withdraw can be put back in your TFSA starting the following year without impacting your contribution room.
What is a segregated fund?
Segregated funds, like mutual funds, are market-based investments. A large pool of money belonging to many people is invested in stocks, bonds or other securities with the goal of increasing the value of the entire pool. However, because segregated fund contracts are insurance contracts, they have special benefits that mutual funds do not.
- Segregated fund contracts guarantee 75% to 100% of your premiums (less withdrawals) when the contract matures, or on your death. Some segregated fund contracts also offer income guarantees.
- Money invested in segregated funds contracts may also be protected against seizure by creditors. This can be a big advantage for business owners and professionals wanting to protect against an unexpected lawsuit or bankruptcy. Consult your tax and legal advisors for details.
- Segregated fund contracts purchased with non-registered money let you name beneficiaries, so the death benefit bypasses your estate and goes directly to them. You can also control how they get the benefit: as a lump sum or in the form of a payout annuity.
- Bypass probate and associated fees by naming a beneficiary
- Resets. The ability to lock in market gains on your investment.
Whether you are saving for a rainy day or saving for retirement, the Pivotal Select contract is available in a wide range of tax registration options including:
- Non-Registered Savings Plan
- Tax-Free Savings Account (TFSA)
- Registered Retirement Savings Plan (RRSP)
- Retirement Income Fund (RIF)
- Locked-In Retirement Account (LIRA)
- Life Income Fund (LIF)