Frequently Asked Questions
What is the RRSP Contribution limit for 2014? Next year?
You will accumulate RRSP contribution room equal to18% of your previous year's earned income up to a maximum of $ 24,270 (minus any pension adjustments) plus the unused room from deductions limits for years between 1991 and 2013. Visit the Canada Revenue Agency (CRA) website for more information on contribution limits:
What is the cut-off date for RRSP contributions for any fiscal year?
You have until March 1 of any year to make contributions to your RRSP and claim them against your previous year's tax liability.
How can I use my RRSPs to help me buy my first home or go back to school?
Through the Home Buyer's Plan, Canada Revenue Agency (CRA) allows you to withdraw up to $25,000 per person from your RRSP if you are a qualified first time home buyer. You must begin repaying those funds back to your RRSP the second year following the year in which you made the withdrawals at a rate of 1/15th of the total amount per year.
Similarly, the Lifelong Learning Program allows you to withdraw funds from your RSP if you, or your spouse, register for a full time educational program. You can withdraw up to $10,000 per year to a limit of $20,000. The repayment period begins in the second year after you are no longer a full time student and you have 10 years to pay back the full amount, 1/10th per year.
Learn more about the HBP and LLP by giving us a call, or visiting: www.cra-arc.gc.ca/E/pub/tg/rc4112/
What do I do with my RRSP when I turn 71?
Your RRSP must be withdrawn, transferred to a Registered Retirement Income Fund (RRIF) or used to purchase an annuity by the end of the year in which you turn 71. If you transfer them to a RRIF or annuity, you will not have to pay taxes immediately, as these will be deferred until you withdraw the funds over time.
To learn more about RRSPs and RRIFs, click here.
How do registered education savings plans (RESPs) and the government grant work?
RESPs are a good way to save for your children's education because the funds within them grow tax deferred. Although the initial contributions are not tax deductible, the income earned is tax deferred and then taxed in the hands of the student when withdrawn (presumably, at a lower marginal tax rate than the contributor).
As the cost for post-secondary education continues to rise, it's important to start funding your child's education as early as possible. Contributors may contribute a lifetime maximum of $50,000 per beneficiary to an RESP. Through the Canada Education Savings Grant (CESG), the federal government will match up to $500 on annual contributions up to a lifetime limit of $7,200. The grant is invested directly into your child's RESP. Certain conditions apply regarding the grant; though, so to learn more please give us a call or visit:
What is the difference between term insurance and permanent insurance?
Term & Permanent Insurance: A Premium Cost Comparison
*Premiums displayed in the chart above are for example purposes only and it is important to understand that these premiums are in no way guaranteed. Chart based on $500k Coverage on Standard Health, Age 40, Non-smoking Male. The example provided is not complete without the London Life illustration, including the cover page, reduced example and product features pages all having the same date. Read each page carefully as they contain important information about the policy.
Term & Permanent Insurance: A Cash Value Comparison
*Values displayed in the chart above are for example purposes only and it is important to understand that these values are in no way guaranteed. Chart based on $500k in Coverage on a Standard Health, Age 40, Male, Non-smoking individual. The example provided is not complete without the London Life illustration, including the cover page, reduced example and product features pages all having the same date. Read each page carefully as they contain important information about the policy.
Term life insurance is temporary and is usually recommended for large needs such as debt cancellation and income replacement. A young family who is dependent on the main income earner(s) to maintain their lifestyle will want to obtain a large amount of term life insurance until at least the children are no longer dependents.
Permanent life insurance lasts your whole life and is usually purchased for estate preservation. Because Term life insurance eventually expires, it is a good idea to purchase a base amount of permanent life insurance to ensure an influx of cash right at a time when your loved ones need it. Permanent life insurance also plays a role in estate planning, particularly where there is a large tax liability on the estate. In this case, the insurance proceeds take care of the tax liability so that the family home, cottage and other assets can remain in the family.
To learn more about term and permanent life insurance, click here.
How much insurance do I need?
A general rule of thumb is to multiply your annual income by 10 to 12; however, there are many different, important considerations involved in determining your insurance needs. The age of your family, your debt load, your individual goals, the amount of capital gains tax your assets will trigger upon your passing, and many other factors should be taken into consideration and that why it’s best to sit down with a qualified financial advisor to determine how much and what type of coverage is best for you.
To learn more about insurance types and benefits, click here.
What is critical illness insurance?
Critical illness insurance is unique in that it pays out a lump sum if you are diagnosed with a qualified critical illness such as heart attack, stroke or cancer and then live for a predetermined survival period (dependent on the specific critical condition). How you use those funds is entirely up to you, whether it's for medication not covered under our health system, to seek out treatment anywhere in the world, hire a private nurse, make adjustments to your home or even go on a trip! The best use of your lump sum benefit payment is entirely up to you. Be sure to ask one of our advisors about the increasingly popular return-of-premium options.
Did you know?
- Although prostate cancer remains the most frequently diagnosed cancer among Canadian men, prostate cancer death rates declined significantly between 1995 and 2004.
- Although breast cancer is the most frequently diagnosed cancer among Canadian women, the breast cancer death rate has declined by more than 25% since 1986.
- Over the past 40 years the rates of heart disease and stroke have steadily declined. The rate has declined 25% over the past 10 years, 50% over the past 20 years and 70% between 1956 and 2002.
Sources: Heart & Stroke Foundation, 2008 and Canadian Cancer Society, 2008. (http://www.greatwestlife.com/001/Home/Individual_Products/Insurance/Critical_Illness_Insurance/SolutionsThatFitYourNee
To learn more about critical illness insurance and disability insurance, click here.