Individuals in receipt of eligible pension income can allocate or split up to 50% of the income with their spouse or common-law partner, and the allocated income is reported as the spouse’s taxable income. This allows the shifting of income from a higher-income spouse to a lower-income spouse, enabling the couple to reduce their combined income tax liability and increase cash flow during retirement.
The introduction of the Tax-Free Savings Account (TFSA) in 2009 presented the most important change to the way Canadians save money. RRSPs were launched in the 1950s. But the big question on many people’s minds is whether they should contribute to a Tax-Free Savings Account (TFSA), the tried-and-tested RRSP, or both?
A Registered Retirement Savings Plan (RRSP) is a great way to invest for retirement and reduce income taxes. But, like most good things, it must come to an end. You are required by law to wind-down your RRSP by the end of the year in which you turn age 71. In reality, most people start drawing on their RRSPs for retirement income before then.
Please note: This article is not applicable in Quebec.
Do you have a Registered Retirement Savings Plans (RRSP) or a Registered
Retirement Income Funds (RRIF)? Designating a beneficiary to your RRSP or RRIF is often presented as sound financial planning, since doing so can avoid probate and probate fees. However, a direct beneficiary designation can result in some negative consequences such as inequitable treatment of heirs, unintended elimination of heirs and unexpected tax consequences to the designated beneficiary.
