*Retirement Planning Flashcards
2021 CPP contribution rates
- 45% for personal
10. 9% for business
CPP monthly reduction rate
0.6% per month
Max 36% at age 60
CPP monthly increase rate
0.7% per month
Max 42% at age 70
CPP Assignment Percent formula
= # of years married/lived together / # of years contributing to CPP
CPP Assignable amount formula
CPP amount for spouse 1 x Assignment percent
CPP survivors pension for age 65 +
60% of CPP up to max of $1203/month (combined)
CPP survivors pension for age 45- 64
Flat rate portion + 37.5% of contributor’s retirement pension
maximum $650.72
Maximum CPP
$1203.75
Post retirement benefit (at age 65) maximum
$30.09
Maximum Disability benefit
$1413.66
CPP for children of deceased
$257.58
Maximum survivors and disability pension combined
$1413.66
Max survivor CPP benefit for 35 and under
nothing until age 65 or until disabled
Maximum OAS Amount
$618.45
Residency- When pensioner lives in Canada for 20+ years after age 18 and moves out of Canada.
Will they receive OAS still?
Yes
OAS Clawback threshold amount
$79845
Maximum annual money purchase plan limit
$29210
Maximum annual defined benefit pension limit
$3245.56 (1/9 of Money purchase limit)
RRSP annual contribution limit
$27830
DPSP annual contribution limit
$14605 (half of MP limit)
YMPE limit
$61600
RESP CESG
20% on first $2500 as of 2007+, max $500
20% on first $2000 between 1998- 2006, max $400
RESP Additional/Enhanced CESG
Income < $49020 = 40% on first $500 max on $2500 =$600
Income between $49020- $98040 30% on first $500, max on $2500 is $550
Income > $98040 - $0
Qualifying factor (Age Factor or Rule 85 )
Age of early retirement = (qualifying factor + age when joined RPP) / 2
What’s not included in earned income for calculating RSP contribution room?
EI, property income (other than rental), taxable capital gain, scholarships/bursaries, business income from limited partnership, RIF, RSP, RPP, OAS, CPP, Death benefits, workers compensation, dividend income, interest income
Retirement allowance
$2000 per year of service before 1996
$1500 per year of service not part of pension before 1989
Max withdrawal for FTHB
$35000
HBP repayment
15 years starting 2 years from year of withdrawal
What’s a qualified RIF?
RIF created before 1992
What’s a non-qualified RIF?
Created after 1993
Minimum RIF calculation for qualified RIF prior to age 79 & Non qualified RIF prior age 71
1 / (90 - age)
What happens to a RSP upon annuitants death and beneficiary is either spouse or dependent child?
Roll over provision allows it to transfer as is to the spouse or dependent child/grandchild.
The amount is not included in income for final taxation.
Advantages to commuting a pension
- greater flexibility of income stream and ability to unlock 50%
- Protection against a company’s uncertain future
- Remaining balance rolls over to spouse
- Invested the way you want and could potentially increase income benefit
Disadvantages of commuting a pension
- outlive the money
- Portion transferred into LIRA exceeds tax deferred amount and the rest is paid in cash and taxed at MTF
- Poor investment performance can result in lower income amount
Yearly Base Income exemption (YBE)
$3500
How do you calculate CPP disability benefits
a flat rate ($510.85) amount plus 75% of CPP up to the max CPP disability amount
CPP disability flat rate amount
$510.85
How long do you have to contribute towards CPP to qualify for it?
10 years
How to calculate pension adjustments for DB Pension plans?
For 1997 onwards: = (9 x benefit entitlement) - $600
Prior to 1997 = (9 x benefit entitlement) -$1000
Benefit entitlement = current pensionable earnings x defined unit percentage
Pension Adjustments for DPSP
The amount the employer has contributed
PA for Defined Contribution plans
Add contributions of both employer and employee
Fully clawed back OAS threshold
$126058
clawback percent when over minimum threshold
15%
RSP Contribution limit
last year income x 18%
plus carryforward
less Pension adjustment / past service PA
plus pension reversal
