...Registered Retirement Savings Plan (RRSP) Submitted By: Instructor: Date: What is an RRSP? A Registered Retirement Savings Plan (RRSP) is a tax-deferred account designed specifically for retirement savings. Any resident of Canada under the age of 71 who has earned income may establish and contribute to an RRSP. (Edward Jones, 2013) RRSPs are the Canadian government's way of helping citizens save their money for retirement. Saving for 30 to 40 years of retirement may seem like a long task, but well-planned contributions and withdrawals from your RRSP can be a great way to get enough money for when you retire. Objective The objective of a RRSP is to provide individuals with an account which they may contribute Tax deferred dollars that may be used for retirement. (Edward Jones, 2013) Types of RRSP’S Here are 3 types of RRSP: * Individual – This is the most common type of RRSP. It is an RRSP that is registered in your name. All investments, contributions, and tax advantages belong to the person the account is named under. * Spousal - This is a way for spouses to split income more evenly during retirement. The combined income tax would be lower compared to paying as a single RRSP. To qualify for a spousal RRSP you must have lived with each other for at least 12 months, have a child together by birth or adoption, or share custody of the other spouses child from a previous relationship. * Group – This is offered to help employees save for retirement. This works...
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...Our company is introducing a Group Registered Retirement Savings Plan (RRSP). The plan offers an attractive retirement investment options to our employees'. One of our main goals of this plan is creating a better future for our employees. We decided to offer them an RRSP which consists more benefits. Our plan includes the employee to contribute 1% to 5% of regular wages to the RRSP. The employer will match up to 3 % of the employee's contribution. Per example, if an employee decides to contribute 2%, the contributions of the employer would match the contributions of his employee on each pay period. Therefore, if an employee contributes 4% of the contributions, the employer will only contribute 3%. This contribution and investment earnings until their retirement. The investment could be ended at any age up to the end of the year where the employee turns 71....
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...CHAPTER 6 – RRSP & OTHER SAVINGS PLANS Why a limit? * Each individual is only entitled to save a specified amount in a registered retirement savings plan * Through pension adjustment (PA), those who participate in employer sponsored plan are limited in how much they can give to RRSP * Limit is based upon earned income in prior year * RRSP contribution limit is cumulative....any amounts not used can be carried forward; therefore, all Canadian taxpayers should try to accumulate contribution room as early as possible. How about investment income???? Is that the same???? Not quite.....why??? The income earned on investments is not “earned income” --- which can be broadly defined as income that was “actively earned”. This leads us to the review of the formula for RRSP contribution limit and the definition of “earned income”. RRSP Contribution Limit: * Start with: * Lesser of: * A) 18% of prior year’s earned income (see below) * B) 2013 money purchase limit * Less: pension adjustment for prior year (from Module #5) * Less/add: PSPA (module #5) * Add: unused RRSP contribution room (carryover of amounts earned but not contributed) * Can be made from January of THAT year to 60 days afte the beginning of next year - contriubtions made in the first 60 days of the year can be used for previous year or the year of contribution Earned Income - Defined: * Generally, excludes income that is earned...
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...| | | | ------------------------------------------------- Top of Form Assessment >> Formal Assessment | | Assessment: End-of-unit formal assessment: Unit 4 (C192V10U4L0A25Q10) | Date Submitted: | 10/29/2011 09:01:00 PM | Total Correct Answers: | 1 | Total Incorrect Answers: | 4 | Your Mark (total correct percentage): 20% | | 1 | Once the Feltham's discharge their mortgage, what tax planning opportunity would be MOST APPROPRIATE during the years that immediately follow? | Incorrect | The correct answer: Mark maximizes contributions to a spousal RRSP for Sarah; Sarah maximizes contributions to her RRSP Your answer: Mark maximizes contributions to his TFSA only; Sarah maximizes contributions to her RRSP | 2 | Based on an analysis of Sarah and Mark's assets, from what tax advantages does the couple currently benefit? | Correct | The correct answer: deferral and avoidance only Your answer: deferral and avoidance only | 3 | If Mark exercises his 12,000 stock options at $39 and sells the underlying shares at the same time, what will his after-tax proceeds be? | Incorrect | The correct answer: $27,720 Your answer: $252,720 | 4 | In reviewing Sarah's method of remuneration from Cognitive Solutions, what statement is MOST APPROPRIATE? | Incorrect | The correct answer: Sarah should continue with her current form of remuneration as doing so creates RRSP contribution room for her. Your answer: Sarah should forego a salary and...
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...Teach to Fish Outreach is an opportunity for young adults to meet once a month with professionals who have financial backgrounds and develop a strong financial foundation. Teach to Fish Outreach will focus on the importance of savings, understanding credit, and retirement savings, which are all critical steps to a strong personal finance position. Saving money is a corner stone to financial security and most Americans have little to no savings. Unexpected expenses manifest all the time, whether it is a nail...
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...______________ Pursuing Universal Retirement Security Through Automatic IRAS and Account Simplification Testimony before The Committee on Ways and Means United States House of Representatives April 17, 2012 David C. John Senior Research Fellow The Heritage Foundation I am David C. John, the Senior Research Fellow for Retirement Security and Financial Institutions at The Heritage Foundation. In addition, I am also the Deputy Director of the Retirement Security Project (RSP). The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation or RSP. Chairman Camp and Ranking Member Levin, I appreciate the opportunity to testify before you on ways to increase retirement savings opportunities for all Americans. With the continued decline in the number of Americans covered by employer sponsored defined benefit plans, millions of individuals whose employers don’t offer any way for them to save for retirement at work, and Social Security’s continued financial problems1, it is crucial that the Congress develops a common strategy to expand retirement savings in a manner that transcends ideological and partisan differences. In 2006, a bipartisan majority in Congress eliminated barriers to the use of automatic enrollment and similar automatic techniques in retirement savings plans with the result that millions more Americans are both saving and building retirement security. The results have been stunningly...
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...RETIREMENT: HOW PREPARED ARE YOU? The Actuary asks A Faculty Lecture by Arnold Ouendo Department of Mathematics & Statistics University of Cape Coast OUTLINE • WHAT IS RETIREMENT? • THE FIVE PILLARS OF RETIREMENT SECURITY • REASONS TO PLAN FOR RETIREMENT • HOW TO PLAN FOR RETIREMENT • POST-RETIREMENT RISKS • SUMMARY • CONCLUSIONS WHAT IS RETIREMENT? • As we grow old, we work less, produce less, and earn less; • We need to secure sources of income other than wages to support ourselves; • Used to contrast a period of gainful employment with a period when an adult is no longer gainfully employed; WHAT IS RETIREMENT? • People often work continuously up to 40 years prior to retiring; • Upon retirement, the retiree relies on the public or private retirement system and/or personal savings for income; • Some workers are beginning to look for opportunities to gradually ease into retirement – often called “phased retirement” THE FIVE PILLARS OF RETIREMENT SECURITY • • • • Social security (SSNIT in Ghana) Employer-sponsor retirement plan Personal savings Earnings from employment after retirement • Income from family members, life insurance, health insurance, and general insurance. REASONS TO PLAN FOR RETIREMENT • Break down of the informal systems – Changes in the family structure – Urbanization, mobility, war, famine, and aids – Family attitudes HOW TO PLAN FOR RETIREMENT TOP 9 WAYS TO BEAT THE CLOCK AND PREPARE FOR RETIREMENT HOW TO PLAN FOR RETIREMENT • Know your retirement...
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...7 golden rules of retirement Experts contend that retirement planning should start from the day you start earning. Sound advice indeed, but one that is seldom followed. This is why ET Wealth decided to bring to you seven immutable rules of retirement planning. Steeped in financial prudence, these canons have been advocated by experts through the decades. Follow them and you can be sure that you will retire in comfort. Save 10% of your income for retirement The first rule of retirement planning is also the easiest to follow. If you have a regular job, then 12% of your basic salary and an equal contribution by your employer that flows into your Provident Fund account is a good way to build a nest egg. The best thing about this option is that you cannot avoid it. EPF rules require all employees to contribute 12% of their basic income to retiral savings, which include the Employee Provident Fund and the Family Pension Fund. It is a forced saving that becomes the default retirement plan for many individuals. The amount of contribution to the EPF does not matter. Given the power of compounding, even a small contribution can bloat into a big sum over the long term. Don't underestimate the significance of the savings in the first few years. Assuming that a 25-year-old investor puts away a fixed amount every month, his savings in the first five years will account for 44% of his total corpus when he is 60 years old. The later you start, the more you will need to save...
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...Retirement Essay It is important for our generation to start preparing for our future as early as possible. During this economic crisis it is difficult to predict our job security as well as our future finances without proper planning. Over the last couple of years we have seen the implications of what can happen to those who do not take actions to secure their finances. For those of us who are in the military we have a bit more control over our job security as opposed to those who are not. Most of us can expect to have a steady income for at least the twenty years should we choose to make the military a career. You should be saving at a minimal fifteen percent of your income each month to prepare you for your future. I recommend that you save ten percent of your gross income for your retirement and the other five percent for your long-term goals. There are many benefits to be had once you start saving such as a substantial savings for your retirement, money to purchase a home, and money for your children’s education. It is often said that the average person’s savings should have enough funds to cover at least six months of your rent or mortgage. It is important for you to start saving early so that you can provide for your family in case of unexpected emergencies, retirement, and future plans. You do not want to rely on high interest credit cards or pay day loans to get you out of a situation. These will only put you further in debt. The sooner you start saving...
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...(KWSP). In brief, EPF is a mandatory savings scheme for every employee from Private and Non-Pensionable Public Sector in Malaysia. 11% of the employees’ monthly gross income would be contributed to the EPF. In addition, the employer would contribute certain percentage to the employees’ EPF accounts. For wages of RM 5,000 and below, the employer would contribute 13% of the wages to the employees’ EPF account, whereas for those wages exceeding RM 5,000, the employer’s contribution would be only 12%. The contribution would then be invested in a number of approved financial instruments such as Malaysian Government Securities, Money Market Instruments, Loans & Bonds, Equity and Property to generate income. The EPF ensure us to have a secure savings and reasonable dividends. A minimum dividend of 2.5% is guaranteed annually. The actual dividend rate declared would be varied according to the investment return made in approved financial instruments as stated. The annual dividends are calculated based on the opening balance in the EPF account as at 1 January of each year, while the monthly dividends would be credited into the EPF account based on the monthly contributions received. It could be observed that enormous amount of the old folks are currently working as taxi drivers, cleaners or even security guards, even after their retirement ages. That is probably because they have spent all of their EPF balances within few years after their retirement. The EPF balances could have been used...
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...Specific Purpose: I want the audience to understand how the military members can accumulate money for retirement with a tsp. Thesis Sentence: While in the military I realized how helpful a TSP savings plan really is when thinking about retiring from the military. Introduction While in the military not only can you retire by getting the same amount of pay you were getting before you retired but, you can also put money aside in a tsp (thrift savings plan). The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan. Congress established the TSP in the Federal Employees' Retirement System Act of 1986. The TSP is a defined contribution plan. The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under so - called "401(k)" plans. Body 1. Some of the features of the TSP * Your TSP contributions are taken out of your pay before taxes are computed, so you pay less withholding tax now. * TSP earnings are tax - deferred. This means you don't pay Federal (and, in most cases, state) income taxes on your contributions or earnings until you withdraw the money - usually at retirement, when you are in a lower tax bracket. * You can diversify your TSP investment among five different...
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...financial problems due because of a lack of jobs, high unemployment, and layoff rates. So there is no guarantee that Social Security benefits will be available for them when they retire, and therefore should not be used for their retirement safety net. In 2016, the Social Security system will begin paying more in benefits than they collect in taxes (2009 OASDI Trustees Report, 2009). Without changes by 2037, the Social Security Trust Fund will become exhausted and they will only be able to pay out 76% of scheduled benefits (2009 OASDI Trustees Report, 2009). If changes are not made be 2037, many Americans may have to work long into their retirement years because only receiving 76% of their benefits will not be a sufficient income. Most Americans, do not think that they will have to work extra years before they can retire, but with the average life expectancy in the United States currently at 78 years (CDC Centers for Disease Control and Prevention, 2010), many retirees may never obtain the opportunity to retire. To receive full retirement benefits, Americans must be 67 (Retirement Benefits, 2010). This only gives American workers an average window of 11 years between retirement and death, and without proper planning and saving; they may never enjoy a retirement. With the Trust Fund depleting rapidly, Americans are hoping Congress...
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...employees in the public and private sectors. Objectives of the Scheme. Withdrawal from retirement savings account. Retirements benefits. Death of an employee. Missing employees. Retirement benefits to be exempted from tax. Exemption from the Scheme. Rate of contribution to the Scheme. . Contribution under the Scheme to form part of tax deductible expenses. Retirement Savings Account and remittance of contributions, etc. Transfer of entitlement from defined benefits scheme into the Scheme. Transfer from one employment to another. PART II - ESTABLISHMENT AND COMPOSITION OF THE NATIONAL PENSION COMMISSION, ETC. 14 15 16. 17 18 19 Establishment of the National Pension Commission, etc. Object of the Commission. . Membership of the Commission. Tenure of office. Cessation of membership. Emoluments, etc. PART III - FUNCTIONS AND POWERS OF THE COMMISSION 20. 21. 22. Functions of the Commission. Power of the Commission. PART IV - STAFF OF THE COMMISSION Secretary and other staff of the Commission. PART V Funds of the Commission. FINANCIAL PROVISIONS 23. A30 2004 No.2 Pension Reform 24. 25. 26. 27. 28. Estimates. Accounts and Audit. Annual reports, etc. Power to accept gift. Power to borrow. PART VI - TRANSITIONAL PROVISIONS Establishment etc of Transitional Provisions for the Public Sector 29. 30. 31. 32 33. 34. 35. 36. 37. 38. Retirement Benefits Bond Redemption Fund. Establishment of Pension Depa11ment. Composition of the Department...
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...Social Security and Retirement Erin Darby COM172 June 7, 2011 Louise Gerdes Social Security and Retirement In the United States, Americans need to plan for retirement. Social Security will not cover people’s needs when retiring. Americans who retire should use savings based on their personal investments, private savings accounts, employer’s pensions such as 401K, and Social Security so that they can live the rest of their lives comfortably. Americans that retire can receive full Social Security benefits depending on their year of birth. For example, baby boomers have the retirement age increased to age 67 for those born after 1960. The generation of baby boomers, Generation X, and Generation Y should be concerned that Social Security benefits will be exhausted when reaching the age of retirement. Without Social Security, what security do Americans really have? Americans should not depend on Social Security for early retirement for several reasons. The Social Security benefit amount might be less than what retirement recipients need, the retirement benefits might disqualify them from receiving full Social Security benefits, or the benefits may no longer be available. One reason Americans should not depend on Social Security is that the benefit amount might be less than what Social Security retirement recipients need. Some workers who have contributed to their Social Security could possibly fall into poverty. According to Laura Sullivan (2008), “future generations...
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...Financial Assignment 3 Retirement Planning Part I 1. I think it would be a good idea for Monica to take control of retirement investing. She has a better concept of saving and planning for the future than Richard does. 2. For once I have to agree with Richard. Saving outside the pension ( while keeping the current pension) is a great idea and the couple has several options available to accomplish this. It would be a good idea to take advantage of the lower tax rates for capital gains and dividends. 3. The shortfall in annual retirement savings can be made up if Monica and Richard choose any of the following alternatives: CD's, bonds, or mutual funds. Altfest asserts that "House liquidation can be viewed as a safety alternative to be used if a financial shortfall occurs."(358) If the couple is not able to cover the shortfall through the other alternatives. They still have their home that can be used to provide additional income with an instrument known as a reverse mortgage. 4. I would recommend that the couple take advantage of the lower tax rates for capital gains and dividends as Richard suggested. The best option for this strategy would be mutual funds. While the suggestion to do this was Richard's, I feel that Monica should decide which mutual funds and how much should be invested. Part II 1. I completely disagree with Brad and Barbara on their view of retirement planning.I would suggest that they each take advantage of a pension qualified plan such...
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