CPP Becomes slush fund for whackos.

[Richard5]

How rude of you, and to think all those people in India paying nothing for our pulses and you won’t even build them a house? 3 hail Mary’s and one lord s prayer and maybe you’ll be spared.

Or if you can’t do that send 5,000 dollars to the liberal party and tru dough might have a conversation that never happened with the big guy to get you off the hook.

Big wheel I think you have a flat....on all sides of your tires

[farmaholic]

We made some mistakes along the way. One thing my accountant pointed out was if the CPP recipients have no spouse or dependant young or handicapped children....your CPP dies with you.

Registered funds, non-registered funds, TFSA, CPP and maybe OAS, Income generating assets, maybe some Company pension, cash, sale of real estate. Depending what you have available and how much of each will determine how you "MANAGE" those resources.

Everyone will have a different strategy.

I've heard people say the older they get the less they spend on "lifestyle", so maybe taking it early might be the thing to do.

I had two uncles that received little or no CPP benefits, never lived long enough.

[farmaholic]

Max CPP contributions..... If you're incorporated and receiving a salary large enough to warrant maximum CPP contributions versus dividend income or rental income from personal land rented to the farming corp, YOU, because "YOU" are the Corporation, could be paying about $8000 in CPP contributions. Your total $4000 payroll deduction and the Company's matching contribution....ouch. That's alot.

Dividend income isn't RRSP eligible.

If you wanted to take dividend income and still make retirement savings equivelant to RRSPs from earned income....wouldn't the investments have to be in funds(mutual or ETFs) that don't trigger a capital gain or an interest slip(T5) to have tax free growth until the units are redeemed?

[Gofer]

We made some mistakes along the way. One thing my accountant pointed out was if the CPP recipients have no spouse or dependant young or handicapped children....your CPP dies with you.

Registered funds, non-registered funds, TFSA, CPP and maybe OAS, Income generating assets, maybe some Company pension, cash, sale of real estate. Depending what you have available and how much of each will determine how you "MANAGE" those resources.

Everyone will have a different strategy.

I've heard people say the older they get the less they spend on "lifestyle", so maybe taking it early might be the thing to do.

I had two uncles that received little or no CPP benefits, never lived long enough.

re:"your CPP dies with you" Your RRIF also is cashed if you die without Beneficiary. Our group had a presentation by an Estate lawyer and she pointed out that if you die with a larger amount left in your RRIF (say 300,000) you would pay 30 or 40 % in tax. The advice being to withdraw more than the minimum 5% per year if you are in a lower tax bracket at present and reinvest outside the RRIF (TFSA first). Then only accrued interest would be taxed.

[Richard5]

re:"your CPP dies with you" Your RRIF also is cashed if you die without Beneficiary. Our group had a presentation by an Estate lawyer and she pointed out that if you die with a larger amount left in your RRIF (say 300,000) you would pay 30 or 40 % in tax. The advice being to withdraw more than the minimum 5% per year if you are in a lower tax bracket at present and reinvest outside the RRIF (TFSA first). Then only accrued interest would be taxed.

I would agree with you Gofer. My biggest point i wish to make note of is using the same example, if a single person dies with max annual cpp contributions over lifetime, the estate gets 2,500. At least in your example, the balance is the estates money. Also remember, although tax of 30-40% is owning on the account, a similar amount would have been saved or deferred as they were bought.

No matter what the scenario, RRSP/RRIF accounts need to be managed whenever possible. The days for most trying to remain in the “Lowest tax bracket” i feel have been long gone. If you have been fortunate to create wealth, planning to make use of clawback of oas (about 75000) and the next tax bracket. (About 90,000) need to be considered.

I remember dealing with my parents before they passed, Dad had bought RRSP’s and only took the minumum out because he and the bank were so worried about paying tax. I had suggested changes and larger withdrawals and when he died 10 yrs ago, the amount left to deal with was minimal.

A good accountant should look at more than just head down current year things. Business and management of tax is long term, good things today pay dividends in the future.

Back to pushing snow!

[farmaholic]

Richard5, are you making big deposits at the snow bank? That will be a very liquid asset in April...good luck!

[Guest]

nowhere left to pile it here

[farmaholic]

nowhere left to pile it here

We finally got some. There is quite a bit of loose stuff just laying around waiting for the next Ghetto blasting wind to blow it away or pile it up in places no one wants it. There hasn't been much wind here lately with the Arctic high locked on us.

[Marusko]

Dividend income isn't RRSP eligible.

If you wanted to take dividend income and still make retirement savings equivelant to RRSPs from earned income....wouldn't the investments have to be in funds(mutual or ETFs) that don't trigger a capital gain or an interest slip(T5) to have tax free growth until the units are redeemed?

ETFs will make distributions which are taxed if it's held in a taxable (non-registered) account. Need to hold them in an RRSP or TFSA to get tax-free growth.

The distributions consist of interest income, dividends, and a sprinkling of capital gains, depending what it's holdings are.

Seems like the way to go to make RRSP room without CPP contributions is rental income.

[farmaholic]

Marusko, I "thought" the capital gains, dividends and interest accrued in the non-registered ETF was tax sheltered until the investor divests themselves of it.

Edit in, well I thought wrong....I checked last year's tax return and attached are T3's (Tylenol 3's)

Sorry.