RSP and TFSA Information
RSP Account Details
A Retirement Savings Plan (RSP), once registered with the CRA (Canada Revenue Agency), allows the plan holder to invest on a tax deferred basis. Contributions made to the RSP are tax deductible (up to a limit) and any income or capital gain received inside the RSP would not be taxed until the money is withdrawn. An IB customer is limited to opening one regular and one spousal RSP account.
PLEASE NOTE THE FOLLOWING LIMITATIONS
- IBC does not offer Locked-in plans or Registered Retirement Income Funds (RRIF). IBC does not accommodate any withdrawals under the Home Buyer's Plan and the Lifelong Learning Plan nor any investments in a home mortgage.
- IBC does not accommodate asset swaps or transfers in kind (cash or securities) from a cash or margin account at IBC or elsewhere to an IBC RRSP or TFSA account at this time.
- IBC does not support RSP/TFSA outbound or inbound transfers (to or from another financial institution) via Free of Payment (FOP) or Direct Registration Statement (DRS).
- IBC does not facilitate RSP/TFSA outbound transfers (to another financial institution) except via the fully-electronic/ATON™ (Account Transfer Online Notification) transfer system.
- IBC does facilitate manual or "non-ATON" RSP/TFSA inbound transfers (from another financial institution).
- Withdrawal only available in CAD.
RSP Account Fees/Maintenance Fee
No account maintenance fee.
Opening your RSP Account
Existing eligible IB customers may open the RSP account as a linked account from Account Management. Under the heading of Manage Account, Add or Link Accounts, Create Linked Accounts, and select RSP/Spousal RSP as account type.
New customers may open RSP/Spousal RSP account by clicking on the Open Account icon from the main IB Canada website. Click on Start an Application and then apply under "Individual Brokerage Accounts and Retirement Account" category.
A customer must be a Canadian resident in order to open an RSP or a spousal RSP account.
Age restriction for the RSP account
Minimum age:
19 years old under BC, NB, NS, NL
18 years old under AB, SASK, MAN, ON, QC, PEI.
Maximum age:
The last day a customer can contribute to an RSP is December 31st of the year they turn 71. Since IB does not offer RIF accounts or annuities, applicant must be less than 69 years to open an RSP/Spousal RSP.
Types of RSP
RSP accounts can be opened either as:
- Regular RSP – A customer can contribute cash and transfer qualified investments ("in kind") from another registered plan account. (IB only supports cash contributions and inbound ATON transfers of existing RSP to start).
- Spousal RSP – This is similar to a regular RSP except that the owner's spouse is allowed to contribute cash to the account as well. The contributing spouse will get the tax deduction for the tax year while the owner will get the benefit of withdrawing at a potentially lower tax rate when they retire.
Maturity of Plans
RSPs have a maturity no later than the end of the year in which the annuitant reaches 71 years of age. By the last day of the year in which the IB customer turns 71, funds must be withdrawn or transferred to an RIF or used to purchase an annuity.
Annual Contribution Limit
The contribution limit for a given tax year is typically displayed on the taxpayer’s notice of assessment produced by the CRA. The contribution limit under the assessment includes unused contribution room for the prior years.
Annual Contribution Deadline
Contributions can be made into the RSP account at any time during the calendar year or no later than 60 days after the end of the calendar year.
Over-contribution to the plan
Any contribution above the limit will be counted as excess contribution. There is a lifetime allowance of 2,000 CAD for over-contributions. Amounts of over-contribution beyond this limit are subject to a 1% penalty tax per month.
Withholding Taxes
A withdrawal of funds from an RSP constitute a de-registration of the plan and is subject to withholding tax. The tax will be withheld by IB at the time of the withdrawal. Gross amount of the RSP withdrawal will be included in the T4RSP slip and will be counted towards the general income that one receives for the calendar year.
Account Insurance
Segregated cash portion held with the trustee is insured up to $100,000 (principal and interest combined) by the Canadian Deposit Insurance Corporation (CDIC), which is a Federal government agency that insures Canadians’ savings against the failure of a bank or other CDIC member institution.
RSP accounts are also counted as a separate account for CIPF coverage, and so are eligible for an additional 1M CAD coverage under CIPF.
Beneficiary Designation
The beneficiary information is not applicable to customers who are residents of Quebec where such a designation can only be made by the deceased's last will and testament.
For other provinces, beneficiaries could be either an individual or an estate. If beneficiary chosen is an Estate; then only ONE beneficiary is allowed. If applicant wants multiple beneficiaries, only individuals would be allowed.
RSP Account Trading Permission
No trading on margin - all purchases must be paid in full in respective currencies; No account debit allowed. If needed, currency trade could be executed between USD & CAD.
Accounts are restricted to cash balances in CAD and USD.
The RSP account is allowed to trade the following qualified investments:
- Stocks listed on designated US and Canadian exchanges (excluding Venture-NEX segment and CSE single listed stocks)
- Long equity call options
- Long equity put options
- Short equity call options with a fully covered position (covered call)
- Long equity put options with a fully covered position (protective put).
- Long put/call options on indices.
- Warrants/Rights if the underlying asset acquired under the right to purchase is a qualified investment.
- U.S. Bonds.
- FX conversions limited to USD/CAD
TFSA Account Details
TFSA (Tax Free Saving Account) is offered by IB Canada for Canadian residents only.
A Tax-Free Savings Account (TFSA) allows customers to set money aside tax-free throughout their lifetime. Each calendar year, customers can contribute up to the TFSA dollar limit for the year, plus any unused TFSA contribution room from the previous year, and the amount withdrawn the year before.
- Investments made inside a TFSA are not taxed.
- Withdrawal from TFSA is not a taxable event.
- Contributions into TFSA are not tax deductible.
- There's no upper age limit to maintain a TFSA account.
- Only individual account in the name of the plan holder can be opened
- IBC does not support RSP/TFSA outbound or inbound transfers (to or from another financial institution) via Free of Payment (FOP) or Direct Registration Statement (DRS).
- IBC does not facilitate RSP/TFSA outbound transfers (to another financial institution) except via the fully-electronic/ATON™ (Account Transfer Online Notification) transfer system.
- IBC does facilitate manual or "non-ATON" RSP/TFSA inbound transfers (from another financial institution).
TFSA Fees/Maintenance Fee
No account maintenance fee.
Withdrawals out of TFSA are not subject to additional account specific charges and are only available in CAD.
Opening your TFSA Account
Existing eligible IB customers may open the TFSA as a linked account from Account Management. Under the heading of Manage Account, Add or Link Accounts, Create Linked Accounts, and TFSA as account type.
A customer must be a Canadian resident in order to open a TFSA
TFSA Account Contribution Limit
| Year | Annual Contribution Limit |
|---|---|
| 2009 | CAD 5000 |
| 2010 | CAD 5000 |
| 2011 | CAD 5000 |
| 2012 | CAD 5000 |
| 2013 | CAD 5500 |
| 2014 | CAD 5500 |
| 2015 | CAD 10000 |
| 2016 | CAD 5500 |
| 2017 | CAD 5500 |
| 2018 | CAD 5500 |
| 2019 | CAD 6000 |
Penalty of 1% per month would be assessed by CRA on excess contribution
TFSA Trading Permission
No trading on margin - all purchases must be paid in full in respective currencies; No account debit allowed. If needed, currency trade could be executed between USD & CAD.
Accounts are restricted to cash balances in CAD and USD.
TFSA is allowed to trade the following qualified investments:
- Stocks listed on designated US and Canadian exchanges (excluding Venture-NEX segment and CSE single listed stocks)
- Long equity call options
- Long equity put options
- Short equity call options with a fully covered position (covered call)
- Long equity put options with a fully covered position (protective put).
- Long put/call options on indices.
- Warrants/Rights if the underlying asset acquired under the right to purchase is a qualified investment.
- U.S. Bonds.
- FX conversions limited to USD/CAD
Account Insurance
A TFSA account is considered part of a customer’s general account for purposes of CIPF coverage. Therefore, a TFSA will be combined with other (Non-RSP) IB accounts eligible for $1 million coverage.
Successor Holder
A TFSA account holder can designate the spouse or common law partner as the successor holder of the account. This means that up the death of the original holder, the spouse/common law partner becomes the new account holder.
If the account holder chooses not to designate his or her spouse or common law partner as successor holder, then a beneficiary could be named.
Successor holder nomination is not available for QC based TFSA accounts.
