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

This can be done by purchasing a life annuity

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This can be done by: Purchasing a life annuity Taxation occurs as annuity payments are received. Purchasing a fixed term annuity Taxation occurs as annuity payments are received. Transferring funds to a Registered Retirement Income Fund (RRIF) Taxation occurs as payments are made from the RRIF RRSP’s must be terminated in the year in which the taxpayer reaches age 71.
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Spousal Plan A taxpayer can make contributions to a plan that will pay benefits to a spouse, called a spousal RRSP This is one of the few income splitting devices available to all couples Allows higher income spouse to boost retirement income of lower income spouse May allow spouse to use $2,000 pension tax credit that they would otherwise lose. Contributions are deductible to contributor, usually the higher income spouse .
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Spousal Plan Income attribution provision Prevents an immediate transfer of funds to the lower income spouse through the use of a spousal RRSP Withdrawals are normally taxed in the hands of the beneficiary spouse If a withdrawal is made from a spousal plan, and the spouse has made a contribution in the current or two preceding calendar years, the withdrawal will be attributed to the contributor. Caution Funds contributed to a spousal RRSP become the property of the spouse. Complete Exercise Ten-9 on Pg. 462
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Home Buyer’s Plan Permits a withdrawal of up to $25,000 without the usual tax consequences under the following conditions: All prior HBP loans have been repaid by Jan 1 of year of withdrawal All amounts must be received during the year, or by Jan 31 of following year Use of funds is for a “qualifying home”, which is a principal residence for the taxpayer within 1 year of its acquisition (no minimum holding period) Must not have owned a home occupied (taxpayer or spouse) during 4 calendar years prior to the withdrawal. Both a taxpayer and spouse could utilize this loan for access to up to $50,000 Borrowings must be repaid over 15 years (maximum, can repay faster if desired) Complete Exercise Ten-10 on Pg. 464
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Lifelong Learning Plan (LLP) Similar to HBP, except use of funds is to finance own or spouses education (but does not have to be used specifically for tuition) Must be enrolled as a FT student in a qualifying educational program at a post secondary institution Limits On Withdrawals $10,000 In Any One Calendar Year $20,000 Maximum Over Four Calendar Years Repayment must begin within 6 years Repay over 10 years straight line. Complete Exercise Ten-11 on Pg. 466 and Self-Study Problem Ten-4 on Pg. 482 -483
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RRSP - Other plan terminations Departure from Canada Does not immediately result in the collapse of the plan.
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  • Fall '10
  • Ann
  • Registered Retirement Savings Plan, RRSP

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