Understanding the Basics - Servus Credit Union

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The greater the future benefits provided by your pensionplan, the less you will be able to deduct as RRSPcontributions. This addresses the main objective of theRetirement Savings legislation – to create equality in thetax-sheltered retirement benefits available to all taxpayers,regardless of their type of pension plan, or whether theyare self-employed, or employed but have no pension plan.Special Transfers to Your RRSPIn addition to your RRSP deduction limit, there are a numberof special deposits you can make to your RRSPs.Lump Sum TransfersYou can transfer lump sums DIRECTLY from a RegisteredPension Plan or a Deferred Profit Sharing Plan (DPSP)to your RRSP.You can transfer amounts DIRECTLY from another ofyour RRSPs (see page 15) or from your RRIF (see page 36)to your RRSP.RRIF Payments in Excess of MinimumUntil the end of the calendar year in which you turn 71,you can transfer DIRECTLY to an RRSP in your own nameup to 100% of any payment from your RRIF in excessof the mandatory minimum payment amount for the year.CRA form T2030 can be used for this purpose. The RRIFcarrier must provide a T4RIF to report the amounttransferred from your RRIF and the RRSP issuer mustprovide an Official Receipt for the amount transferredto your RRSP.Retiring AllowancesA retiring allowance is a lump sum or sums paid to you byyour employer, at or after your termination, in recognitionof your loss of employment. Accumulated sick leave creditspaid qualify under this definition, but holiday pay, deathbenefits and pension benefits do not. The portion of aretiring allowance eligible for sheltering in your own RRSPcan either be transferred directly (no income tax deducted),or up to 100% can be contributed in the year of receipt orwithin 60 days thereafter. No portion of a retiring allowancecan go to an RRSP in your spouse’s name.UNDERSTANDING ALL THE BASICS 5
The maximum retiring allowance which can be sheltered is:• $2,000 for each full or partial calendar year of servicewith your current employer prior to 1996, plus• an additional $1,500 for each full or partial calendar yearof service prior to 1989 with your current employer,in which you were not a member of a pension plan orDPSP, or years for which your employer’s contributionsto such plans have not vested in you.The transfer of a retiring allowance to an RRSP doesnot affect your RRSP deduction limit for that year.RESP Accumulated IncomeProvided the RESP subscriber has sufficient RRSPcontribution room and is a Canadian resident, she/he cantransfer up to $50,000 of accumulated income from anRESP to an RRSP in the name of the subscriber or to aspousal RRSP in the name of the subscriber’s spouse.Any of the following conditions must be met:• the RESP must have been in existence for at least 10*years and all beneficiaries of the Plan are deceased, orall living individuals who are or were beneficiaries underthe RESP have attained the age of 21 years and are notpursuing post-secondary education, or• the payment must be made in the 35th year followingthe year the Plan was entered into, or• each individual who was a beneficiary under the Planmust be deceased when the payment is made.Only amounts transferred within the subscribers RRSPdeduction limit and deducted in that year will avoid taxation.There is a special 20% surtax on excess accumulatedincome withdrawn by the subscriber.* The “10 year” and “age 21” rules may be waived in specialcircumstances.Contributing to RRSPs in Your Spouse’s NameNOTE: Throughout this booklet:– the term spouse can also be read as common-law partner(see definition on page 2)– the term spouse in the locked-in pension information also includesother individuals who have been given similar rights under applicablepension legislation– reference to spousal plan includes common-law partner plan6UNDERSTANDING ALL THE BASICS
Page 2 and 3: This Understanding All The Basics b
Page 4 and 5: Table of ContentsRRSPWhat is an RRS
Page 6 and 7: RRSPWhat is an RRSP?A Registered Re
Page 8 and 9: What is Earned Income?Your RRSP ded
Page 12 and 13: Part or all of your RRSP deduction
Page 14 and 15: Over-contributionsOver-contribution
Page 16 and 17: • Provincial legislation- The Alb
Page 18 and 19: Since mutual fund investments do an
Page 20 and 21: Back-End LoadInstead of a front-end
Page 22 and 23: Form T2205 is available at the Taxa
Page 24 and 25: Applying for Your Home Buyers’ Wi
Page 26 and 27: sixth year following the first with
Page 28 and 29: When Designating a Beneficiary on a
Page 30 and 31: Whatever method of designation you
Page 32 and 33: Is Retirement Income Taxable?There
Page 34 and 35: You cannot contribute directly to a
Page 36 and 37: Minimum Payment, Age More Than 77Fr
Page 38 and 39: Saskatchewan RRIF (SK RRIF)The SK R
Page 40 and 41: Indexed Life AnnuityThis increasing
Page 42 and 43: Who Sells Retirement Income Options
Page 44: ® HANDS & GLOBE Design is a regist

Understanding the Basics - Servus Credit Union

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