How do I model withdrawing from an RRSP to fund a TFSA?
Where to find it: AUTOMATIC SAVINGS and WITHDRAWALS → Add Saving or Withdrawal
Use two entries in AUTOMATIC SAVINGS and WITHDRAWALS: a negative withdrawal from the RRSP and a positive deposit to the TFSA. Select the correct recipient and contributor, including the spouse when the money is intended for their TFSA.
Use the same date for both if this is a one-time movement, with each entry’s start and end dates identical. For recurring annual amounts, give them the intended date ranges. The withdrawal and deposit do not have to be equal: a taxable RRSP withdrawal can leave less money available after tax.
For example, a $10,000 RRSP withdrawal is -10000 on the RRSP entry. A proposed $8,000 TFSA contribution is +8000 on the TFSA entry, subject to that holder’s available room. TIME MACHINE calculates the tax and uses PRIORITIES to resolve any remaining excess or deficit.
Check the detailed report rather than assuming the deposit is funded entirely by the withdrawal. Other cash flows can contribute. This represents a taxable withdrawal and contribution, not a tax-free registered transfer.