Contributions to a Tax-Free Savings Account (TFSA) are made with after tax dollars, as such withdrawals from a TFSA are tax-free. Withdrawals from a TFSA may be contributed to a Registered Retirement Savings Plan (RRSP) but keep in mind that once you contribute to a RRSP, any withdrawals from your RRSP will fully taxable as income in the year withdrawn. These previous Investing Questions questions may help build your knowledge around RRSPs and TFSAs.
- “What is the difference between a TFSA and an RRSP?”
- “How does a TFSA work?”
- “If I withdraw $10,000 from my TFSA this year, can I put it back into my TFSA next year?”
- “Does the RRSP withholding tax remain at 10% for multiple withdrawals in one year of $5,000 or less?”