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Portfolio Allocation Calculator w/o TFSA <--> RRSP transfers

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asked May 30, 2016 04:22 PM by
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Following the other thread "Invest in company RRSP or open separate RRSP", my employer also has a RRSP contribution matching program, so because of this I am reluctant to transfer funds from my RRSP to TFSA since I will be hit with a big tax bill. It seems like the Portfolio Allocation calculator prefers putting funds into TFSA over RRSP if there is extra TFSA and RRSP contribution room - it will advise to transfer funds from RRSP to TFSA.

@Jin: Would it be possible to adjust the Portfolio Allocation Calculator so that it could also take into account employer matching contributions somehow or specify that we do not want to do any TFSA <-> RRSP transfers to avoid a tax hit?

Thanks.

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answered May 31, 2016 02:23 PM by
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Thuantta,

I understand that based on your inputs the calculator is telling you to withdraw from RRSP to TFSA, but I think there is a larger issue here that needs to be addressed.

The idea within this website is to focus on where each of the funds of your eventual retirement fund should go. So, if you take the general allocation (ie 80% RRSP / 20% TFSA) you can get an idea of what you need to do to fund both aspects of the plan. I think in that spirit, you are best served by ignoring the employee/employer RRSP program within the calculator.

Think of the RRSP matching program as a intermediary where you contribute and get a huge return (employer) then cyclically transfer the funds into your "final" retirement fund. Any transfer fees may be waived by Questrade (or your broker of choice) and any remaining fees can be attributed to the MER savings you will likely incur by the DiY approach.

This way you can use any new savings that you have above and beyond retirement matching abilities to fill in the TFSA requirements as per the calculator, rather than withdrawing from an RRSP and incurring a potential tax hit (not to mention the permenant loss of contribution space in that RRSP).

Hope this helps.

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answered May 30, 2016 09:40 PM by
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updated May 30, 2016 09:41 PM by
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Actually I just found a way to prevent the RRSP to TFSA transfer suggestion from the calculator and that is to set the unused TFSA contribution room to $0. So in my case the calculator will advise to invest in XEG.TO in my TFSA and the rest of the allocations will be in my RRSP.

@Jin: if you have any other suggestions, please let me know! Thanks.

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I'll see if I can implement a proper solution to this problem. Might take a while though.

Jin Choi ( Jun 01, 2016 09:59 AM )edit

No worries, just a suggestion. I can work with this. I'm also able to use the quick re-balancing tool to get the # of shares I should aim for but as for what and how much to allocate in my TFSA or RRSP I have to do that manually.

thuantta ( Jun 01, 2016 10:25 AM )edit
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