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And because TFSA withdrawals aren’t considered to be income, they don’t negatively impact income-tested benefits and credits, like the Guaranteed Income Supplement, Old Age Security payments or the age credit.

Even upon death, the entire fair market value of your TFSA can be received by your estate tax-free. And if you name a successor holder or beneficiary on your TFSA, the assets can flow directly to the named successor holder or beneficiary without going through the estate, which could mean potential savings on provincial probate fees or estate administration taxes.

If you name a successor holder, who can only be your spouse or partner, the TFSA will continue to grow tax-free and your surviving spouse or partner steps into your shoes and becomes the new TFSA holder. Alternatively, if your spouse is the beneficiary of your TFSA, she can transfer the entire FMV of the TFSA upon your death to their own TFSA without using any of their own TFSA contribution room, thus prolonging the tax-free income and growth in the plan.

You can contribute at any age

To contribute to an RRSP, you must be 71 years of age or younger and you must have “earned income,” which is typically (self-)employment income or rental income. Contrast that with the TFSA in which there is no age limit and no earned income requirement.

One popular strategy that has emerged is for seniors, who are required to withdraw a prescribed minimum amount annually from their RRIF at age 72, to recontribute any after-tax withdrawals not needed to fund living expenses back into a TFSA for tax-free retirement accumulation.