Affluent may qualify for GIS: key is large TFSAs

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Good piece in Wednesday’s Financial Post by Morneau Shepell’s Fred Vettese about how even higher-income Canadians may be able to qualify for the Guaranteed Income Supplement to Old Age Security. Normally, those with big RRSPs fret about having OAS benefits clawed back and they don’t even think about the GIS.

But, as writers have been pointing out ever since the Tax Free Savings Account (TFSA, the Canadian equivalent of the U.S. Roth plans) started up in January 2009, a big benefit of the TFSA is that when you pull money out it’ s not only tax-free but also doesn’t result in clawbacks of either OAS or the GIS. Today, it’s common to see TFSAs with balances of $40,000 and in some cases much more. (See the annual MoneySense Great TFSA contest, where some of the “winners” have hundreds of thousands in them. Similar tales have been told in recent issues of the Financial Post.)

Consider that a dual-income couple could by now easily have between $80,000 and $100,000 in a TFSA, even if conservatively invested. Add another $11,000 between them in January 2015 and we’re talking real money.

Vettese’s article is the best I’ve seen even pointing this out. Put this into your “Decumulation” file!

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