Before making any contributions, confirming your personal contribution limits is crucial. You can find these on your Canada Revenue Agency (CRA) Notice of Assessment or by accessing your CRA account online. Remember, over-contributing can lead to penalties of up to 1% per month, so it's best to be cautious!
TFSA (Tax-Free Savings Account)
The 2024 annual TFSA contribution limit has increased to $7,000. If you're new to TFSAs and meet the eligibility criteria, your cumulative total contribution limit is now $95,000. Withdrawals made in 2023 or earlier? No worries, you can recontribute that amount starting January 1, 2024. Plus, any unused carry-forward room can be contributed at any time.
TFSA Contribution Limits Since Inception:
- 2009-2012: $5,000 annually
- 2013-2014: $5,500 annually
- 2015: $10,000
- 2016-2018: $5,500 annually
- 2019-2022: $6,000 annually
- 2023: $6,500
- 2024: $7,000
Total Since Inception: $95,000
RRSP (Registered Retirement Savings Plan)
The deadline for 2023 RRSP contributions is February 29, 2024. The maximum limit for 2024 is $31,560, or 18% of your annual earned income. Remember, you can contribute more if you have unused contribution room from previous years.
FHSA (First Home Savings Account)
Exciting news for first-time homebuyers! The FHSA is a new program, based on eligibility criteria, designed to help you save effectively for your first home. The annual contribution limit is $8,000, with a lifetime maximum of $40,000. Contributions are tax-deductible, and withdrawals are tax-free. If you plan to buy your first home, consider setting up an FHSA with Matco to start accumulating contribution room. Like the RRSP and TFSA, your unused contribution room carries forward.
How to Contribute:
- Direct from Your Bank Account: Matco can facilitate electronic transfers, lump-sum or monthly, from your bank account.
- Scheduled Contributions: Opt for automatic monthly or quarterly contributions to leverage dollar-cost averaging and manage cash flow effectively.
- From Your Matco Investment Account: Transfer funds from another Matco investment account, ideally taxable. However, using your TFSA for RRSP or FHSA contributions might be beneficial in certain scenarios.
Have questions about these programs? Your Matco investment team is here to help. Don't hesitate to reach out for personalized advice and support.
