• visit our website
• view your statement
• click for an appointment

Facts about your RRSP - part 2

Death of a Plan Holder
In the event of death, the proceeds of your RRSP are distributed to whoever was named as your beneficiary, or to your estate if no beneficiary has been designated. This designation can be specified in either your RRSP or in your will. Quebec residents must make the designation by will or marriage contract for most plans. The proceeds of the RRSP will remain fully or partially tax-sheltered if one of these situations applies:

• Your surviving spouse is the beneficiary, and the proceeds are transferred into an RRSP or a Registered Retirement Income Fund (RRIF) in his/her name. Subsequent withdrawals will be taxed in the surviving spouse's hands.
• You have children or grandchildren who are minors named as beneficiaries of your RRSP and who are dependent on your estate for financial support. In this case, the RRSP proceeds can be taxed in their hands in the year of your death or transferred to a term annuity to age 18 that is registered in their names, with tax payable only on annuity payments received each year. The rest of the funds continue to grow tax-sheltered.
• Your beneficiary is a child or grandchild, regardless of age, who is financially dependent on your estate because of physical or mental infirmity. Similar to the option for a surviving spouse, the RRSP proceeds can be transferred to an RRSP or RRIF registered in the child's name, without immediate tax implications, or used to purchase an annuity. Withdrawals will be taxed at the beneficiary's ates. In all other situations, the balance of the RRSP at the date of death is included as income on the plan holder's final tax return.

Making RRSP contributions and managing the investments properly is a very important aspect of your financial plan. Great care and attention should be made to how your RRSP is invested based on your tolerance for risk and time horizon. This year, we are offering to review all of our clients' RRSP portfolios and to make recommendations to ensure you remain on track to living your dream. We will also show you how a new Tax-Free Savings Account, introduced just this year, can be an excellent complement to any investment strategy. Turn the page to learn more. If you would like an RRSP profile done for your situation, please contact our office for a consultation.

"A Tax-Free Savings Account is an attractive new savings option that can complement your RRSP and play a key role within your overall financial plan."

Introducing the Tax-Free Savings Account
A Tax-Free Savings Account is an attractive new savings option that can complement your RRSP and play a key role within your overall financial plan. It's designed to help you save for any financial goal - a car, a new business or, simply, for a rainy day - without ever having to pay tax on investment income or withdrawals.


Contributions

• Contributions to a TFSA can begin on January 2, 2009.
• Qualifying Canadians aged 18 years or older can contribute up to $5,000 annually to a TFSA, and limits will increase with inflation. Any unused contribution room can be carried forward.
• For income-splitting purposes, an account holder's spouse or common law partner may gift funds to the account holder for the purpose of a contribution. Parents may also gift funds to their adult child(ren) for the purpose of a TFSA contribution. Withdrawals
• Tax-free withdrawals can be made at any time and for any purpose.
• Amounts withdrawn may be reinvested in any subsequent year, without affecting your contribution room.
• Income earned or withdrawals made from a TFSA will have no effect on an investor's federal income-tested benefits and credits such as the Child Tax Benefit, Guaranteed Income Supplement, Old Age Security benefits, and Goods and Services Tax credit.

Taxation

• Interest, dividends, and capital gains earned within a TFSA will not be taxed.
• Contributions are not tax-deductible, and interest on loans made for contributions to a TFSA cannot be deducted for tax purposes.
• Upon death, TFSA assets can be transferred to a spouse without affecting the survivor's contribution room.*

Eligible Investments:

• Most investments that can currently be held in an RRSP will be eligible for holdings in a TFSA.

To learn more about what a TFSA can do for you as part of your overall plan, please contact us.

Return to Newsletter

• Financial Calculators
• Reports
• Our Services
• Rate Report