10%20-%20Retirement%20Savings%20and%20Other%20Special%20Income

Withdrawals are subject to tax under part xiii of the

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Withdrawals are subject to tax under Part XIII of the Act. Amounts must be repaid by the earlier of: Filing date for year of departure 60 days after becoming non-resident Death of annuitant If there is a surviving spouse, RRSP can be rolled over to spouse on a tax free basis. Note that in order to be eligible to do this, the spouse must be named as the beneficiary of the plan, not named in the will. Complete Self Study Problem Ten-4 on page 482 .
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Registered Pension Plans (RPP) These plans are established by a contract between employer and employee They are becoming less popular than they have been historically. Employer contributes, and may deduct the contributions made in year + 120 days. Contributions to a money purchase plan are deductible when made in accordance with plan as registered (cash basis)
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Registered Pension Plans (RPP) Excess contributions There are provisions to limit the amount that can be contributed, so that people with RPP’s don’t have access to more retirement savings than people without RPP’s The plan will become revocable (cancellable) when the PA of any plan member exceeds the lesser of: The money purchase limit for the year ($22,000 for 2010) 18% x employee compensation from employer
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Registered Pension Plans (RPP) Employee contributions Are deductible to employee Will be included in the PA
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Registered Retirement Income Funds (RRIF’s) Taxpayers can transfer their RRSP funds to an RRIF tax free, and they commonly do this when the taxpayer turns 71 and is no longer eligible for an RRSP. Can have multiple accounts, and can set up at any age. Withdrawals from the plan are calculated based on a formula, and a minimum amount must be withdrawn beginning in the year after it is established. For individuals <79 at beginning of year, minimum withdrawl = FMV/(90- age at beginning of year) For individuals >79 the minimum withdrawal = a specific percentage x FMV. Percentage changes annually, for example, it is 8.53% at 79 8.75% at 80, 13,62% at 90, and maximizes at 20% per year starting at age 94. Complete Exercise Ten-12 on Pg. 462 and Self Study Problem Ten-7 on page 484
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Remaining topics in Chapter 10 These topics are not being covered, however, if you are interested, the book is always available for you to read! Death of RRIF registrant Deferred Profit Sharing Plans Profit Sharing Plans Transfers Between Plans Retirement Compensation Arrangements Salary Deferral Arrangements (actually discussed in Chapter 3) Individual pension plans.
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