TFSA and RRSP - Two great investment opportunities, but which one is right
for you?

CIBC's Jamie Golombek on choosing the investment solution that suits your strategy

TORONTO, Feb. 2 /CNW/ - January 2009 ushered in the arrival of a new tax-efficient savings and investment option for Canadians in the form of the Tax-Free Savings Account (TFSA), but where will investors be putting their money this RSP season? With the March 1st RRSP contribution deadline coming up, investors may still be wondering where they will direct their savings.

"While the RRSP has long been the go-to retirement planning solution for most Canadians, the arrival of the TFSA presented investors with a new, highly flexible savings vehicle with a seemingly endless number of practical applications," says Jamie Golombek, Managing Director of Tax and Estate Planning for CIBC. "And for those who did not open a TFSA last year, they now have the opportunity to contribute up to $10,000 in 2010."

To help investors decide on a course of action, Golombek offers an overview of both plans:

    The case for TFSAs:

    "While the TFSA is an effective investment vehicle for virtually any
purpose, its higher liquidity and lower annual contribution limit may make it
more useful to some as a short-term savings option for a major purchase or an
emergency fund as you can withdraw anytime without tax repercussions," says

    Plan characteristics include:
    -   Canadians 18 or older can contribute up to $5,000 annually to a TFSA
        and invest in GICs, mutual funds and other eligible investment
    -   Earnings and withdrawals are tax-free
    -   Withdrawals can be made at any time (depending on the investments
        chosen), for any reason
    -   Funds withdrawn can be re-contributed beginning the following
        calendar year
    -   Withdrawals don't affect your eligibility for federal income-tested
        government benefits such as the GST credit or Old Age Security
    -   Any unused contribution room can be carried forward from year to year
    -   Contributions are not tax-deductible

    The case for RRSPs:

    "The most appealing advantages of the RRSP are that contributions go
towards reducing your taxable income while you earn tax-sheltered growth on
assets and earnings held within the plan," says Golombek. "RRSPs can also be
used for other purposes beyond retirement, as some funds can be accessed
tax-free if withdrawn towards the purchase of a first home or to pay for
post-secondary education."

    Plan characteristics include:
    -   Qualified investments earn tax-deferred compound growth
    -   Contributions are tax-deductible
    -   Income earned in your RRSP is tax-sheltered until withdrawn
    -   Your unused contribution room can be carried forward indefinitely
    -   Income splitting upon retirement can be achieved through a spousal
        RRSP before age 65 as opposed to pension income splitting from a
        RRIF, which can only be accomplished from age 65

"Investors closer to retirement who expect to retire to a reduced income and taxation level should make their RRSP a priority," says Golombek. "Any money leftover after making your maximum annual RRSP contribution can always be put towards a TFSA."

Investors also need to consider the importance of liquidity when weighing their options: "You need to examine your own financial needs and goals and know how much liquidity you require as the tax consequences of early RRSP withdrawals can result in the temporary loss of income-tested benefits and permanently reduce your contribution room."

Finally, Golombek recommends consulting a financial professional. "A financial advisor can help you align your investment options to your goals and work with you to develop a long-term financial strategy."

For more information please visit your nearest CIBC branch or

CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at


For further information: For further information: contact Doug Maybee, Director, External Communications and Media Relations, CIBC, Tel: (416) 980-7458,

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