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Preparing for retirement and taking advantage of tax benefits.

RRSP, TFSA, RRIF and Other Plans.

Before investing, the first step is choosing the right plan. Plans are made up of segregated funds or guaranteed interest accounts (GIAs). They must be selected in accordance with your investor profile and the source of your savings.


To Save.

  • Registered Retirement Savings Plan (RRSP).
  • Tax-Free Savings Account (TFSA).
  • Locked-in RRSPs.
  • Non-Registered Savings Plan (NRSP).
  • Individual Pension Plan.

To Receive an Income.

  • Registered Retirement Income Fund (RRIF).
  • Locked-in RRIFs.
  • Annuities.

Segregated Funds.

  • Monthly Returns and Fund Profiles.
  • Unit Value.
  • Fund Facts.
  • Portfolio Funds.

Advantages of an RRSP.

  • Amounts contributed to an RRSP may be deducted from taxable income on their annual income tax returns.
  • Returns on investment are tax sheltered.

How does the RRSP work?

  • Withdrawals are taxed as income, whether before or after retirement.
  • The maximum RRSP contribution amount for the year is indicated on your Notice of Assessment provided by the Canada Revenue Agency (CRA). The RRSP contribution amount is calculated based on 18% of earned income, less pension adjustment, if any, up to a maximum amount of $27,230 for 2020.
  • You must begin withdrawing the accumulated amount in your RRSP by December 31st at the latest, the year you turn age 71.

In the Event of Death.

  • The accumulated amounts in an RRSP are paid in cash, less tax deductions, to the last designated beneficiary.
  • The accumulated amounts may be transferred, without any tax deductions, to a spouse’s RRSP if he / she is the beneficiary.

Spousal RRSP.

  • You may contribute a portion or the entire maximum amount permitted into the RRSP of your spouse. You can then deduct these amounts on your own income tax return.
  • You may do so until the end of the year your spouse turns age 71.
  • The amount contributed to the spouse’s RRSP does not reduce the maximum amount of your own RRSP contribution.

Advantages of Contributing to a Spousal RRSP.

Retirement income is divided between the two spouses, which reduces the total tax payable by the couple.

TFSA: A practical addition to your savings portfolio.

The tax-free savings account (TFSA) is a registered savings plan for retirement or any other project like a trip, a new car, renovations or a down payment on a house.

Who can contribute to a TFSA?

Canadians aged 18 and over can contribute to a TFSA, whether they receive a salary or not.

Advantages of a TFSA.

  • The returns on an investment in a TFSA are tax-free.
  • The amount of unused contribution room may be carried over to subsequent years.
  • Withdrawals are not taxable, whether before or after retirement.
  • Withdrawals may be made at any time, Redemption fees may apply.

How does the TFSA work?

  • The maximum contribution amount to a TFSA is $6,000 per person since 2019. You may also use the Canada Revenue Agency’s Tax Information Phone Service (1-800-959-8281) to find out your TFSA contribution ceiling.
  • You may not deduct your TFSA contributions in your income tax return.
  • The amounts withdrawn from the TFSA are added to the maximum annual contribution amount.

TFSA Performance.

The Canadian Government’s Tax-free savings account website explains the TFSA in more detail.

NRSP: To set aside additional savings.

The non-registered savings plan (NRSP) is a plan that lets investors set aside additional savings for retirement or any other project when the maximum RRSP, TFSA, individual pension plan (IPP) or “Pension Plan” contributions have been reached.

Advantages of an NRSP.

  • The amounts may be withdrawn at any time from the segregated fund or GIA selected.
  • It is useful for setting aside savings in the short or long-term.

How does the NRSP work?

  • You can not deduct the invested amount on their annual income tax return.
  • Investment income is taxable.

IPP: To maximize retirement capital of business owners and senior executives.

The individual pension plan (IPP) is a defined benefit pension plan for business owners and senior executives.

It is the ideal financial vehicle that enables investors to make more significant contributions than RRSPs as soon as they turn age 40.

Advantages of the IPP.

  • Company contributions are tax deductible.
  • Returns are tax free.
  • It is possible to purchase past service to make up for the years of service when you may not have contributed enough your your retirement.
  • It is possible to increase the annuity amount upon retirement.

RRIF: Maximum flexibility for retirement savings.

The registered retirement income fund (RRIF) is the simplest way of using a portion or all of the savings accumulated by you in RRSPs to obtain a retirement income.

Advantages of a RRIF.

In order to continue getting a return, the amounts are invested in:

  • Segregated funds.
  • Non-redeemable GIAs.
  • Redeemable GIAs.
  • High yield accounts.

The investments in the RRIF generate returns that are tax free.

Withdrawals from a RRIF.

  • All withdrawals are taxable as income.
  • Different income options are offered to address your retirement needs.

Minimum income.

  • The minimum income RRIF allows you to retain as much tax-sheltered income as possible for future needs.
  • You withdraw only the minimum amount of income required under the Income Tax Act.
  • The annual minimum income is established at the start of the year, based on a percentage of the RRIF’s residual value. This percentage depends on your age or your spouse.

Fixed income.

  • The fixed income RRIF provides income stability.
  • You determine the amount of your annuity according to your needs and the type of investment.
  • If the amount of your annuity is lower than the amount set under the law, the annuity must be recalculated.

Level income.

The level income RRIF allows for the division of the total income over a desired number of years.

To plan a more secure retirement.

An annuity is a contract where you give a sum of money to an insurance company, which in turn, agrees to pay you a regular income.
  • You no longer have to worry about the return on your investments.
  • In most cases, the parameters of an established annuity cannot be charged.

Life annuity.

The life annuity guarantees you a regular income for life.

The following factors may influence the amount of the annuity payments:

  • Amounts paid by you.
  • Your sex and your co-annuitant, where applicable.
  • Your age and your co-annuitant, where applicable.
  • Interest rate in effect.
  • Guarantee period chosen where the annuity is paid to the beneficiary in the event of death.
  • Survivor annuity percentage, that is the percentage of the annuity that can be paid to the spouse in the even of your death.
  • Increasing annuity, where applicable.

Retirement income planning.

You will have to determine the type of annuity that best suits your financial needs.
  • Such options as increasing annuity or continuation to your spouse provide adequate protection for you and your spouse and their estate.

Life annuity.

A life annuity offers the highest income. The annuity can not however be paid to a beneficiary or the estate in the event of your death.

Guaranteed life annuity.

In the event of your death, payments to the beneficiary will be made until the end of the guarantee. The guarantee periods generally offered are 5, 10 and 15 years, and end at age 90.

Joint and survivor annuity.

In the event of your death, the payments to the co-annuitant will be made for the rest of his / her life. The percentage of the annuity paid to the co-annuitant varies from 60% to 100%.

Guaranteed joint and survivor annuity.

This annuity combines the advantages of the guaranteed life annuity with the joint survivor annuity.

Term certain annuity.

The term certain annuity is an annuity payable for the duration of a determined period of time.

It provides a constant periodic income and spreads the capital and generated income over a defined period of time based on a guaranteed rate of return.

The following factors may influence the amount of the annuity:

  • Capital invested by you.
  • Interest rate in effect.
  • Term of the annuity.

The duration of the annuity can be established based on the desired number of years or on age. When money comes from registered funds, only the annuity ending at the age of 90 may be selected.

The payment of the annuity becomes guaranteed for the term selected. Should you die before the end of the annuity, payments will be made to his / her beneficiary.

Segregated funds.

Income Funds.
Balanced Funds.
Canadian Equity Funds.
Foreign Equity Funds.
Specialty Funds.

As you have probably concluded there are many variables to consider when deciding which type of investments are best for you. Contact Jack to help you decide which type of investments best suit you and your family’s needs.