Retirement saving in Canada purpose is to promote saving for retirement by employees.It effects on earned income.Canada has a variety of program available to retired people whose benefits decrease as one's income increase.

The Registered Retirement Savings Plan (RRSP) program allows savings for retirement to grow tax free in a special savings plan registered by the Canada Revenue Agency.

A tax-free transfer between separated spouses can only be made pursuant to a court order or a separation agreement relating to the settlement of rights arising out of the marriage, on or after the breakdown of the marriage. The court order or separation agreement must specify either (a) all of the funds in the RRSP or (b) a named amount of the funds in the RRSP or (c) a specified percentage of the funds in the RRSP be transferred to the other separated spouse. A request is made by the annuitant ( e.g. your mother ) to her plan holder ( transferor ) accompanied by the court order or separation agreement to transfer a sum of money directly to her separated spouse ( i.e. your father ). CRA form T2220 is completed and signed by both the annuitant ( i.e. your mother ) and the transferor and this form together with the required funds are transferred directly into the RRSP of the transferee's client ( i.e.. your father ). The transferee and your father sign Form T2220, the transferee retains one copy and sends 2 copies back to the transferor. The transferor retains one copy of the form and sends one copy to the CRA.

The purpose of this form and its related procedures is to prevent the transferor from issuing Form T4RSP and withholding any related income tax which the transferor would normally do upon the release of funds from a RRSP and prevents the transferee from issuing an income tax receipt which the transferee would normally do when a deposit is made to a RRSP.

The last day to collapse a RRSP is December 31 in the year the annuitant turns 71. In lieu of collapsing the RRSP and taking all the funds in a lump sum thereby incurring a heavy tax penalty, consideration should be given to purchasing an annuity with the plan funds or transferring the funds to a RRIF ( Registered Retirement Income Fund ). The taxes to be paid are far less onerous. I would strongly advise that if either of these options are being considered, then both you and your mother seek out the services of a professional tax advisor who can explain in detail the differences between the two plans Give this serious consideration long before she has to make a final decision as to the disposition of her RRSP.

Yes, thank you. I ended up finding a GIS calculator and basically the best case scenario is for my mother to withdraw all of her RSPs in one shot (which she'll do this year). I have another question, though:

Assuming both sides are consenting, can an RSP transfer occur from one separated spouse to another? I found this PDF http://www.cra-arc.gc.ca/E/pbg/tf/t2220/t2220-10e.pdf) and was just wondering if there needs to be a "REASON" for the transfer (i.e. RSP transfer is requested in a Separation Agreement), or if it can just occur at separated spouses will. If my father, who is not a senior or collecting Old Age Security, consented to this transfer and bought my mother's RSPs from her (in cash), this would release my mother from her massive income spike and pass it on to my father like a hot potato...is that correct?

Thanks DanielBl!

Yes, the money taken out of the RRSP will be considered income by the Canada Pension Plan and will affect the guaranteed income supplement portion but not the OAS during the year she withdraws it. You can read up on it easily by visiting Service Canada's website.

http://www.servicecanada.gc.ca/eng/isp/pub/oas/gismain.shtml

However, if it is her first purchase, she could receive the First Time Home Buyers (non-refundable) Tax Credit of $5000.00 X 15% [lowest tax rate] =$750.00. That was the 2009 rate. It may be more now. How much more hasn't been released yet.

http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html#q4

Her rental costs for a condo are not eligible for tax deductions, but Ontario does provide property tax credits for seniors. However, you can't claim overlapping periods for 2 principal residences.

hey johnyboy... that question is a bit advanced for this discussion forum... i wouldn't even venture a guess...

hopefully somebody who is experienced in that area will chime in and answer.

I just joined this site to desperately ask this complicated and time-sensitive Accounting question. Any help (or a referral to an Accounting site) would be greatly appreciated!

My 70 year old mother has $28k open/unlocked in RSPs. Will removing it all at once affect her old age security or GIS (guaranteed income supplement) since RSP withdrawal will show up as "income"? The reason I'm thinking of removing it all at once instead of $14k now and $14k next year (since age 71 is the last year that she's allowed to hold RSPs) is because she had major expenses in 2010 (this year), which I THINK can help off-set the perceived income from her RSP cash out.

She rented a condo (April 9 2010 to April 9 2011) and has just purchased an apartment (closing January 31st 2011). Rent on condo is $1650 + hydro + phone + cable per month. So, can this rental fee be deducted from her RSP income to create a smaller overall income? Since she signed a contract and can't get out of it, what happens to the overlap (between January 31st of her newly purchased apartment and the rental of her condo which expires April 9 2011)...can it be deducted?

My knowledge of accounting is obviously extremely limited and I'd really appreciate any help on this matter...especially since I only have a few weeks to act (since end of year is almost here). THANK YOU.

Before you begin, you should try to estimate what your retirement income needs will be. How much money will you need on an annual basis to live comfortably in your retirement years? Once you have a rough idea of this amount, you can enter your current income and RSP contribution information to find out how much you will need to put into savings to reach your retirement goals.

Are you saving for retirement?
Have you sat down and asked yourself your questions about retirement?

The bottom line question is this:
How much money are you going to need to live the type of lifestyle you want when you retire? Or are you going to have to continue working to maintain that lifestyle?

Working when you're retired is not a bad thing.. but maybe it's not part of your plan?!!