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Can you transfer tax-free from a RRIF to a TFSA?



Our response:

Registered Retirement Income Funds (RRIFs) and Tax-Free Savings Accounts (TFSAs) are both accounts registered with the federal government, however they have different purposes. Registered plan rules are regulated through the Canada Revenue Agency – you can learn more about both these plans find contact information through the CRA website.

RRIFs are intended to provide income in retirement, and you must take minimum mandatory withdrawals each year. RRIFs can be set up by converting funds from a Registered Retirement Savings Plan (RRSP). While contributions to RRSPs are tax-deductible, all withdrawals from RRIFs (or RRSPs before you convert them to receive retirement income) are fully taxable in the year withdrawn. TFSAs allow investors to save for any goal tax-free, and contributions are made with after-tax income.

You can’t transfer funds tax-free from a RRIF to a TFSA. You can, however, use funds from a RRIF to add to a TFSA as long as you have available TFSA contribution room. One such type of transfer is an “in-kind transfer”. Like any RRIF withdrawal, you’ll have to include the withdrawal amount as income during tax time.

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