RRSP Q&A: I'm 69 — should I put money from house sale in RRSP? - MoneySense

RRSP Q&A: I’m 69 — should I put money from house sale in RRSP?


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.

I turned 69 in December and I am a single male. I will be selling my house this spring and I have $45,000 contribution room in my RRSP. Should I take $45,000 from the sale of my home and contribute to my RRSP to save on taxes in the 2010 tax year? —Robert

Warren Mackenzie and Ken Hawkins: When you are 71 you will have to start taking out money from your RRSP anyway so there is not as great a benefit in adding money into your RRSP. At your age the only exception might be if you are in the top tax bracket now and expect in two years time to be in a lower tax bracket. Depending on your other sources of income you should be aware that the forced withdrawal of the RRIF might put you into the ‘clawback’ zone which will mean that in addition to paying income tax you will also lose a portion of your OAS.

Having assets outside of your RRSPs also gives you more flexibility in tax planning.

Next question: Should I use my refund to pay down debt?

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