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Victoria is 58, married and recently retired. She wants to continue enjoying her current lifestyle. |
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Lily is 47, self-employed and married with children. She tends to be conservative with her income. |
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Robyn is 38, a nurse, and separated with two children. She is concerned about her kids, and her future.
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| Luckily, money matters don’t have to be complicated. TD Waterhouse investment specialist Patricia Lovett-Reid sat down with the women to discuss retirement planning. |
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What is the best time to make your RRSP contribution and take your RRSP deduction? |
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The best time to make your RRSP contribution is “the sooner the better”; to take full advantage of the tax deferred compounding of your RRSP investments. However, there is no rule that requires you to take the RRSP deduction in the year that a contribution is made. You can deduct your RRSP contribution in the year of contribution or in any subsequent year. Thus, if you are in a low tax bracket in the current year but expect your taxable income in future years to be much higher, and you have the cash and the RRSP contribution room, consider contributing to your RRSP now but delay claiming the RRSP deduction until subsequent years when you are in a higher tax bracket. |
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Can you make contributions to your spouse’s RRSP if you are over 71 years old? |
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Yes. Although at the end of the year in which your spouse reaches age 71, he will be required to collapse his RRSP. He can still make RRSP contributions to a spousal RRSP so long as he has RRSP contribution room (either through carry forwards or because he continues to generate earned income). Thus, your spouse can make RRSP contributions to a spousal RRSP for you after the year in which he turns 71, so long as you are 71 years old or less. Also, your spouse will continue to get the tax deductions for the spousal RRSP contributions. |
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What happens to an RRSP upon divorce? |
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Generally, funds may not be transferred from the RRSP of one spouse to the RRSP of the other. However, The Income Tax Act permits a tax-free transfer of an RRSP from one spouse to another as a division of property in a "settlement of property or support rights" in a marriage breakdown. This also applies to common-law partners. The required conditions are:
 The spouses (or ex-spouses) are living apart at the time of the transfer,
The transfer is made under a written separation agreement or under a decree, order
or judgment of a court, and
The transfer is made to settle rights arising out of the marriage or on the breakdown of
the marriage.
The transfer is done via Form T2220.
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Also read more about retirement in the FAQ section. |
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