5- Retirement Planning Flashcards
What is a prescribed annuity
a prescribed annuity spreads the interest portion of the payment, and the taxation evenly over the life of the annuity
How long can RRSP contributions be made if the taxpayer has died?
60 days of the year end
What cannot be held in an RRSP
Private Corporations
Real Estate, exception REITS
Commodity and future financial contracts
Listed personal property (jewellery, arts)
How does a market value adjustment work?
- The interest that would have been earned would be adjusted to reflect the rate that was available when the annuity was purchased
- If the rate that was available when the annuity was purchased is higher than what the rate they need to pay now is the client would be charged a penalty
What are the requirements for the allowance
- spouse must be collecting OAS
- Age 60-64
- Resident of Canada for at least 10 years after the age of 18
- allowance stops at 65 because now you qualify for OAS
What is a straight line annuity
What is a life annuity with guaranteed term
What is a life annuity, cash refund
What is a Instalment Refund Life Annuity
Straight Line Annuity: The annuity will pay a certain amount for a stated period of time, if the annuitant dies the payment will stop
Life Annuity with Guaranteed Term: pays until the annuitant dies or until the end of the guaranteed term
Life Annuity, Cash Refund: the annuity pays for life, but if the annuitant dies before they have received their initial premium the difference is paid back to the beneficiaries as a lump sum
Instalment Refund Life Annuity: the annuity pays for life, but if the annuitant dies before they have received their initial premium the difference is paid back to the beneficiaries as income
By what/who are group RRSP governed?
Tax legislation
How are minimum withdrawals from a RRIF determined if the RRIF was established after 1992 or the RRIF holder is older then 78
it is a percentage that increases each year and levels off 20% once the plan holder reaches 95
