August 28, 2019

Tax implications of making transfers between registered accounts

Before you transfer funds between registered accounts, it’s important to understand the rules that apply for that type of account and under what circumstances you may be able to access your money in that account. Exceptions exist for withdraws from a locked-in account based on extreme financial hardship, shortened life expectancy and sometimes based on your age and what province you live in. For instance, someone in Ontario can transfer up to 50 percent of the balance inside an LIRA to an LIF, and then, up to 50 percent of that LIR balance can be withdrawn or transferred into an RRSP. Provided all the money is transferred into an RRSP, then you would only need to report the changed, but there are no tax implications.

“Generally, transfers between registered accounts like RRSPs, LIRAs, RRIFs, LIFs, RESPs, and TFSAs do not have tax implications. The funds transfer over on a tax-free (for TFSAs) or tax-deferred (for other accounts) basis.”

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