Planning for Retirement•Minimal benefits are available to all taxpayers from Old Age Security•Canada Pension is only paid to former employees and individuals reporting business income who contribute •Above and beyond these two sources of income, there are some savings plans that will provide additional benefits–Registered Retirement Savings Plans (RRSP)–Registered Pension Plans (RPP)–Registered Retirement Income Funds (RRIF)–Deferred Profit Sharing Plans (DPSP)–Tax Free Savings Accounts (TFSA)•Our focus will be on RRSP’s with some discussion of RPP’s
The Basic System for Retirement Savings•Savings in RPP’s and RRSP’s are deductible for tax purposes when an amount is contributed to the plan by the taxpayer.•Employer contributions to an RPP are not considered to be taxable benefits. •In addition, the plans earn income tax free•At retirement, funds are withdrawn from the plan gradually over a number of years, and taxed at the time of withdrawal (usually at this point in life the taxpayer is in a lower tax bracket)•Retirement savings have an annual limit that is consistently applied
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