From February 16 to 19, 2010, MoneySense.ca’s top financial planners are answering your RRSP questions. For the full list of questions answered — or to submit a question of your own — click here.

If I want to add new money to an existing couch potato portfolio at rebalancing time, should I rebalance first, and then split the new money in the original ratio and add to each component?
Or should I just split and add the new money directly to an existing potato to bring the value of each component back to the original ratio without selling anything, i.e. add less new money to the well-performed components and more to the under-performed components?

What about when I want to withdraw money? Do I rebalance and take same ratio out, or take out correct amount from each component to bring back to orignal ratio?

Will the RRSP contribution room (Line A from Notice of Assessment) be reinstated if a person contributed to RRSP, then later determined he/she could not use the RRSP deduction at all and withdrew the unused contribution (Line B of Notice of Assessment, or the amount show on RRSP receipt) using Form T3012A or T746 from the RRSP either in the same year, or in future years? — W.H.

Karin Mizgala: The simplest way to rebalance is to add new monies to the funds that need topping up to bring them in line with the target ratio. If the ratio is still out of balance after adding the new monies, you can then make further adjustments by moving monies between accounts as needed. Do the same when you withdraw funds. Take monies first from funds where you are too heavily weighted, then withdraw the remaining funds in the same proportions as the target ratio.

Your RSP contribution room would not be affected if you made a contribution, did not deduct it against income and later withdrew it using Form 3012A.  For further clarification call Canada Revenue Agency at 1-800-959-8281.

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