The Investment Industry Association of Canada (IIAC) has applauded measures announced in yesterday’s federal budget, particularly the increase in the TFSA contribution limit and the reduction to RRIF minimum withdrawal amounts.
“These combined changes represent the most cost-effective approach to strengthening the retirement savings process for all Canadians,” says Ian Russell, IIAC president and CEO.
“Statistics show that 71% of Canadians maximizing their TFSAs are over the age of 55,” so seniors will benefit from the increased limit. After age 71 they are no longer able to contribute to their RRSPs and TFSAs will serve as an ideal savings alternative.
Russell points to additional benefits of the increased TFSA contribution limit for investment and growth: “These increased savings will be channeled to public and private investment across the country, providing much-needed capital for business expansion, jobs and economic growth resulting in additional tax revenue. This will offset the costs of the increased TFSA limit.”
IIAC has long advocated removing the minimum annual withdrawal requirements from RRIFs. “In light of increasing life expectancy, changes to [RRIF] requirements will provide greater flexibility for Canadians to manage their RRIFs more effectively,” Russell says.