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Displaying 111 to 120 of 247 Records.
<HOW CAN I REDUCE TAXES ON MY CPP/OAS?>
<SHOULD MY WIFE WITHDRAW RRSP SAVINGS?>
<CAN I MOVE MY RRSP MONEY INTO MY WIFE'S PLAN?>
<HOW CAN I REDUCE TAXES ON MY SEVERANCE PAYMENT?>
<WANTS TO BUY AIM GLOBAL TECHNOLOGY>
<WHAT'S THE BEST WAY TO HANDLE OUR DEBT?>
<NEEDS SOME UNBIASED ADVICE>
<SHOULD I USE MY RRSP TO PAY DOWN THE MORTGAGE?>
<SHOULD I HAVE CONVERTED MY RRSP TO A RRIF?>
<WANTS TO SAVE FOR GRANDCHILDREN'S EDUCATION>
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HOW CAN I REDUCE TAXES ON MY CPP/OAS?
I have a question to which I would appreciate an answer. I turned 65 but continue working. If I collect my CPP & OAS benefits while working , what should I do to minimize my income taxes? - O.B.
Both CPP and OAS are considered as regular income, and must be treated as such on your tax return. But if you are still working, you will have earned income from that source, which entitles you to an RRSP contribution. This can continue until the end of the year in which you turn 69. So why not use the CPP and OAS payments to contribute to an RRSP? That way, the government is, in effect, making your contribution for you. - G.P.
SHOULD MY WIFE WITHDRAW RRSP SAVINGS?
Is there some advantage to a 62-year-old with about $6,000 yearly income to remove money from her tax-sheltered RRSP ($225,000) and put it in her non-registered plan? We're thinking of taking about $20,000 a year from the registered plan. The money is not needed to live on as the husband has good retirement income. - P.G.
Let's look at this idea very carefully. As things stand right now, your wife pays no income tax and the money is compounding in the RRSP tax-sheltered. You can also claim a small spousal tax credit for her.

If she draws $20,000 a year from the RRSP as you suggest, you will lose the small spousal tax credit and she will have to pay tax on most of the money taken out. If the remainder (which will be substantially less than $20,000 after taxes) is then re-invested in a non-registered portfolio, all the income earned will be taxable.

Since you don't need the money, it makes much more sense to leave matters as they are and let the RRSP assets continue to grow tax-sheltered for as long as possible. When your wife turns 65, transfer enough money to a small RRIF to generate $1,000 a year in additional income. This can be sheltered under the pension tax credit. - G.P.

CAN I MOVE MY RRSP MONEY INTO MY WIFE'S PLAN?
I average about $57,000 a year in salary. I have an RRSP in my name and another spousal plan. I want to transfer the amount of my RRSP to the spousal plan because there is no benefit for me when I retire due to my federal government pension. Revenue Canada says pay 20% AMT and claim it as income but get a tax receipt for the contribution. I really don't know what to do here. Is there some way around this? - D.F., St. Lawrence, NF
First, let's be clear on one basic point. You cannot transfer your personal RRSP to a spousal plan. The only circumstances under which a spouse can receive your RRSP is either through divorce or death, and I assume you aren't contemplating either.

This means that the only way to get the money from your plan into hers would be to withdraw it from your RRSP and pay the tax, since it would be treated as income. Then, if you or she has enough RRSP contribution room available, the money could be moved into a personal plan for your wife or a spousal plan. Of course, in the process you lose whatever contribution room you had available for new money.

Frankly, this doesn't make any sense. If there is contribution room available, use it to put new money into your wife's spousal plan and don't contribute any more to yours. So you'll end up with more money than you know what to do with in retirement. There are worse fates.

Incidentally, there is a lesson here for anyone working in a job that has a good pension plan (public servants, teachers, auto workers, etc.). Don't let this happen to you! Set up a spousal plan early. - G.P.

HOW CAN I REDUCE TAXES ON MY SEVERANCE PAYMENT?
I will be receiving severance pay from my previous employer. How can I minimize tax payment? - D.P.
It depends how long you were with the company. For every year or part-year of employment up to and including 1995, you are allowed to roll over $2,000 of your severance money into an RRSP. This is over and above your regular contribution limit. So, for example, if you started work with your employer in 1990, you could tax shelter $12,000 ($2,000 x 6) in this way. Unfortunately, the government does not allow any such credits for 1996 on.

You are also allowed an additional rollover of $1,500 a year for each year you were with the employer up to and including 1988, and did not participate in a company pension plan.

For more details, see the chapter titled Rollovers in Gordon Pape's 2000 Buyer's Guide to RRSPs. - G.P.

WANTS TO BUY AIM GLOBAL TECHNOLOGY
I would like to invest $5,000 - and of course want to invest when it's low and watch it soar up! I'm told AIM Global Technology is what to buy.

1. How do I buy it? 2. What are the fees? 3. What is the minimum I can buy? 4. How would I know when I should sell? 5. Is this a good time to buy or should I wait til it drops? - A.P.

First, I should make the point that technology funds are volatile by nature (this fund lost a quarter of its value in the stock market drop in early April) and should only be held as a small part of a larger, well-diversified portfolio. As we explain in the April 25 issue of the Internet Wealth Builder newsletter, investors are likely to be much more cautious as a result of the mid-April correction and there is no guarantee that tech stocks, and funds, will resume their dizzying upward ride.

That said, here are the answers to your questions.

1. The AIM funds can be purchased through any registered representative (broker, planner, etc.), or through discount brokers.

2. All the AIM funds carry an optional front or back-end load. Front-end charges are negotiable. There is also a "low-load" purchase option with a maximum 2% redemption fee which is normally made available only to institutional buyers, so you may not be told about it. Ask.

3. Minimum initial investment is $500.

4. If you buy a technology fund, you should have a time horizon of at least three years. As a general rule, you should not be trading in and out of mutual funds.

5. There is no way of knowing when the "right" time to buy is. If you are concerned about further declines, use a dollar-cost averaging approach and spread your investment over several months. - G.P.

WHAT'S THE BEST WAY TO HANDLE OUR DEBT?
My wife and I are balancing between my student loan, a car payment, a small but annoyingly persistent credit card debt and we must seriously look into home renovations in the next year.

My philosophy has been to accelerate payment on the highest interest loans. My wife put some money into RRSPs this year and, together with your Q&A archives, I believe I need to rethink my approach.

Our total debt is relatively small ($15,000ish). The advantage we currently have is that we have plenty of flexibility with payments - I can easily put down whatever extra money I have towards the loan. This works for us because it is convenient and we do put away what we can.

Should we be looking at finding a financial advisor to determine the best payment plan? - M.Z.

I don't think you need a financial advisor for this purpose. What you should try to do is to consolidate all those little debts into a single loan that bears the lowest possible rate of interest. Since you're considering renovations, you are obviously home owners. A home equity line of credit might be a possibility. Alternatively, increase the mortgage on your home when it comes up for renewal and use the proceeds to pay off the other debts (the mortgage interest rate will be much lower). Another option is to sign up for one of the low-interest credit cards that are being promoted and consolidate the debt in that way. Or talk to your bank about a personal loan. The less interest you have to pay, the faster the debts can be wiped out and you can move forward. - G.P.
NEEDS SOME UNBIASED ADVICE
I have read several of your books and have subscribed to your Mutual Funds Update, which has been very informative. But I still don't know if I am on the right track with my investments in order to meet my long-term goals. Is there an unbiased source of information that could review the investments in my portfolio and advise me if I should keep or sell my current funds or maybe suggest others to acquire both inside my RRSP and outside of it? - K.P.
You might consider consulting a fee-for-service financial planner. They charge on an hourly basis and do not sell any products, so they have no vested interest in getting you to switch to something else. If you want to locate such a planner in your area, check out the Web site of the Canadian Association of Financial Planners at www.cafp.org - G.P.
SHOULD I USE MY RRSP TO PAY DOWN THE MORTGAGE?
I have an existing mortgage of approximately $30,000 at a little over 6% interest. I also have RRSPs valued at about $32,000, diversified among mutual funds and GICs, with the average rate of return for the past year at about 13%. My question is: Would it be a good idea to take the money from my RRSPs and pay off my home and then start investing in RRSPs again with the amount I would have used to pay my mortgage? - A
Probably not. When you withdraw the money from the RRSP, it will be taxed as income at your marginal rate. If you have income from other sources (for example, if you are working), you will likely end up sending 40% - 50% of the value of the RRSP to the Canada Customs and Revenue Agency (formerly Revenue Canada). So the $32,000 in the RRSP would end up actually paying down only about $16,000 - $19,000 of the mortgage. You'd still be carrying the rest of the debt and have zero in the RRSP.

At an average annual rate of return of 10% (well below your current 13% return), your present RRSP will be worth about $215,000 in 20 years, even if you never contribute another cent. If you start again from zero contributing, say, $2,000 a year (remember, you still have the rest of your mortgage to pay off), the plan will be worth about $115,000 after 20 years at 10%. I don't like the math. - G.P.

SHOULD I HAVE CONVERTED MY RRSP TO A RRIF?
I am 60 years old, have a small company pension plus early CPP which pays $450 per month. My financial advisor suggested to convert my $300,000 RRSP into a RRIF and now I receive an additional $500 per month.(Traveling money.) Was this a wise move or are there better ways? I do not feel comfortable maturing my RRSP so early! - U.W.
Too bad you didn't ask us before you agreed to this move. It may not have been the right thing to do. The first thing you need to consider when facing a decision like this is whether you need regular income from the RRIF at this stage, or you just want to dip into the plan for travel or other occasional expenses. If the latter is the case, then it does not make sense to convert the RRSP to a RRIF at age 60. Remember that once you have made the conversion, you must withdraw a minimum amount from the RRIF each year, whether you need the money or not. That's taxable, of course, and it depletes your tax-sheltered assets within the plan. If you only require occasional withdrawals, it would appear you would be better off retaining the RRSP and taking some money from it as required. That way, you will only need to withdraw whatever you actually need. Let the rest continue to compound within the plan until you turn 69. - G.P.
WANTS TO SAVE FOR GRANDCHILDREN'S EDUCATION
Should someone in a 50% tax bracket use mutual funds in trust or buy a Registered Education Savings Plan (RESP) for his or her grandchildren (ages 2 and 4) -- or use another vehicle to put a few thousand dollars per year aside for them? - L.M., Toronto
There is no easy answer to this. Both the RESP and the in-trust approach have advantages and disadvantages. You'll find all this spelled out in detail in my book Head Start, published by Stoddart. However, in general terms, if you want to invest a large sum of money up-front for the grandchildren, you may prefer to use the trust approach. If the investment is going to be limited to a few thousand dollars a year, then the RESP is probably better because it comes with the additional bonus of the Canada Education Savings Grant which can add up to $400 a year per child to the plan. - G.P.
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