Taking out RRSP below personal exemption
I suggested to my wife that she should start cashing out her rrsp and open a tfsa account. She has almost no income while she is staying home to raise our kids. She is well below her personal income tax exemption and I think would pay no taxes moving her rrsp into a tfsa. I know the bank is required to withhold a percentage, but she should get it back with her tax return this year. The tfsa is not counted as income at retirement, and might keep her taxable income lower during retirement. Am I missing something? Illegal? Any ideas?