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Understanding Automatic TFSA Setup in Client Plans


Understanding the Allocation of Savings Contributions and the Automatic Creation of Tax-Free Savings Accounts (TFSAs) in Milestones Retirement Insights

Question: Milestones Retirement Insights automatically sets up a Tax-Free Savings Account (TFSA) in our client's plan. Is this where the "savings contribution" is allocated to? As I haven't set up either of these in this particular plan, I’m uncertain as to why savings contributions are being debited and where they are being allocated.

Answer: Milestones Retirement Insights software automatically adds money to a TFSA because it is considered the most tax-efficient savings vehicle for the money, despite there currently being no TFSA funds for the client. Essentially, the software is advising you to open up a TFSA for the client and save there. This setup ensures that any contributions made are optimized for tax efficiency, providing clear guidance on the best actions to take for maximizing the client’s financial growth while minimizing tax liabilities.

Keywords:TFSA, Savings Contribution, Tax Efficiency


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