A group Tax-Free Savings Account (TFSA) is a type of savings plan under which contributions aren't tax-deductible. However, no tax is payable on investment income or withdrawals!
Advantages of a group TFSA
- Investment income is maximized in a tax shelter, much like it is in a Registered Retirement Savings Plan (RRSP) or a Defined Contribution Pension Plan (DCPP)
- Can be offered on its own or as an add-on to an existing plan
- Unused contribution room can be carried forward
- Tax-free withdrawals can be made any time, freeing up an equivalent amount of contribution room
- Doesn't affect eligibility for federal plans (Old Age Security or the Guaranteed Income Supplement)
Features of a group TFSA
- Available to Canadian residents aged 18 or over since January 2009
- Contribution limit of $5,000 per year (indexed to inflation and rounded to the nearest $500), independent of contributions to an RRSP or a registered pension plan (RPP)
- Subject to the same investment restrictions as RRSPs
Which retirement plan is right for you? Check out the Retirement savings plan table.
This text is for information purposes only. Refer to your policy for all conditions, exclusions and restrictions.