Personal Finance

Employer Health Spending Account and Group RRSP

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  • Aug 2nd, 2016 11:11 am
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Nov 1, 2007
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Employer Health Spending Account and Group RRSP

Hello,

Could use some advice. My employer offers benefits through a tax-free health spending account. Being a young, single guy, I don't have a use for most of them. Funds not spent can be contibuted to a group RRSP or forfeited. No employer matching on funds.

Seeing that Im in the lowest tax bracket, does it make sense to have these funds contributed? Or better to let this free money just go to waste in order to save contribution room until im in a higher tax bracket. Its about $1500 a year.
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Deal Addict
Mar 1, 2016
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toronto
flamez1000 wrote: Hello,

Could use some advice. My employer offers benefits through a tax-free health spending account. Being a young, single guy, I don't have a use for most of them. Funds not spent can be contibuted to a group RRSP or forfeited. No employer matching on funds.

Seeing that Im in the lowest tax bracket, does it make sense to have these funds contributed? Or better to let this free money just go to waste in order to save contribution room until im in a higher tax bracket. Its about $1500 a year.
it's free money, take it.


actually if you have the contribution room, you don't have to take the deduction yet, you can take it later if you want....

take the money, and consider yourself lucky your employer is offering you this option. curious when do you have to make the election?
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Jan 27, 2004
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ONTARIO
foreigncontent wrote: it's free money, take it.


actually if you have the contribution room, you don't have to take the deduction yet, you can take it later if you want....

take the money, and consider yourself lucky your employer is offering you this option. curious when do you have to make the election?
For sure... It is highly advantageous to take these benefits!
The ESOP that's been offered to me has been a life saver... Right when I started I opted for the maximum contribution allowed to fully take advantage of the matching.
3 years later... The stock is doing well. ITs a nice chunk of play money. Buttttt. I'm just saving it for emergencies.
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Nov 1, 2007
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foreigncontent wrote: it's free money, take it.


actually if you have the contribution room, you don't have to take the deduction yet, you can take it later if you want....

take the money, and consider yourself lucky your employer is offering you this option. curious when do you have to make the election?
I definitely wont be taking the deduction..i will hardly owe any taxes for the next few years because of unused tuition tax credits.

What do you mean by the election exactly?
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Also..kind of on a related note. I will be purchasing a house within the next 5 years. Currently maxing out my TFSA (mix of t-eseries index funds and HISA at EQ bank, just to be safe).

Does it make sense to contribute to my employer's RRSP after maxing out the TFSA in order to use the Home Buyer's Plan. Employer offers a 2% match that vests after 2 years
Deal Addict
Mar 1, 2016
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flamez1000 wrote: I definitely wont be taking the deduction..i will hardly owe any taxes for the next few years because of unused tuition tax credits.

What do you mean by the election exactly?
when do you have to decide to transfer? annually when making benefit election, or once you are sure you didn't need the HSA amount?

don't forget you will be taxed on the contribution, since it's an RRSP
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Nov 1, 2007
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foreigncontent wrote: when do you have to decide to transfer? annually when making benefit election, or once you are sure you didn't need the HSA amount?

don't forget you will be taxed on the contribution, since it's an RRSP
Anually during the benefit election.
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Apr 2, 2015
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Ottawa, ON
flamez1000 wrote: Does it make sense to contribute to my employer's RRSP after maxing out the TFSA in order to use the Home Buyer's Plan. Employer offers a 2% match that vests after 2 years
2% ?! Is that a typo?

Guess better than nothing, though - many folks have no plans at all. Watch vesting small print and any fees obviously too if applicable to your gRSP...

RSP and HBP by extension can be a useful part of your tax planning and income smoothing when starting out, HBP better when you know you'll have the future income or that of a spouse to have lots left over to "pay yourself back" and not take a tax hit on a lean year not paying back the RSP fairy...

TFSA not a bad choice and it's great you're saving and in a tuition credit scenario - remember those RSP deductions can be carried forward too so keep it in your arsenal when it's right for you - when you hit the next tax bracket in your province for instance.
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Oct 6, 2010
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canconsumer wrote: 2% ?! Is that a typo?

Guess better than nothing, though - many folks have no plans at all. Watch vesting small print and any fees obviously too if applicable to your gRSP...

RSP and HBP by extension can be a useful part of your tax planning and income smoothing when starting out, HBP better when you know you'll have the future income or that of a spouse to have lots left over to "pay yourself back" and not take a tax hit on a lean year not paying back the RSP fairy...

TFSA not a bad choice and it's great you're saving and in a tuition credit scenario - remember those RSP deductions can be carried forward too so keep it in your arsenal when it's right for you - when you hit the next tax bracket in your province for instance.
Pretty sure he means 100% match, up to 2% of salary...
Deal Addict
Mar 1, 2016
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flamez1000 wrote: Anually during the benefit election.
so technically it's not HSA unspent (which i wasn't sure if that was even allowed under ITA, someone can chime in), you must decide ahead if you want the money allocated to HSA, or RRSP.
still have it to RRSP, but now you need to estimate at start how much you need for HSA (which is worth more, since untaxed in most jurisdiction)
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Dec 14, 2007
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flamez1000 wrote: Also..kind of on a related note. I will be purchasing a house within the next 5 years. Currently maxing out my TFSA (mix of t-eseries index funds and HISA at EQ bank, just to be safe).

Does it make sense to contribute to my employer's RRSP after maxing out the TFSA in order to use the Home Buyer's Plan. Employer offers a 2% match that vests after 2 years
Assuming, as others have as well, that your employer matches 100% up to 2% of your salary and if so... max your RRSP first, before TFSA.

That's a 100% rate of return.

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