HLT EPMA TL ONS as eset ERE AE ER OTB CL Russell Moidowan . THE BOTTOM LINE - .MAKING CONTRIBU- . TIONS to a spousal RRSP . "ean help significantly with your long-term retirement ms planning. - ‘But first, a few explanations. ‘Just what is a spousal RRSP? It is a ‘self-directed RRSP which is regis- ©? tered inthe name of your spouse “and to. which both you and your + spouse can make contributions. " .(Note that for this purpose, spouse ‘does not include a common-law spouse. )- ~ The reason you would want to establish a spousal plan i is to pro-. vide two streams of income during retirement. This is because, : depending’ on income levels at the time of retirement, the taxes you" would pay as a family on the two streams could be much lower than ona single'stream flowing to one person. Taxes would then be further reduced at age 65 when both peo- ple become eligible for the pension . Income tax'credit for income derived from an RRSP annuity or RRIF. * Spousal plans'are especially attractive for couples where only : one person has been working over the years. Spousal plans can resuit in significant savings over the Tong’ f term, but many people neglect to take advantage of them. Consider the following example: If you earn considerably more than your spouse, and your annual con- tribution limit is $13,500, you might consider contributing the entire $13,500 to your spouse's plan. Or $6,750 to your spouse's plan and $6,750 to your own plan, Any combination is possible as “Jong as you do not exceed your own personal contribution limit. You can then claim the entire con- tribution as a tax deduction from your current income. When you retire, the income produced by the annuity or self- directed RRSP rolled into your spouse’s RRSP will be taxed in the hands of your spouse, likely at a lower rate, A word of caution for our mod- ern saciety: In the event of mar- riage breakdown, the spousal RRSP now belongs to your spouse, so spousal plans should only be con- sidered when a murriage is consid- ered to be stable. This should also be considered in view of any provincial laws governing the divi- sion of assets in the event of 4 mar- ital breakdown. You should also not contribute to a spousal plan with the intention of cashing-in the RRSP within a few years because, according to the Income Tax Act, if the holder of a spousal RRSP deregisters it during the year a contribution was made or ~ in the following two years, the con- tributing spouse will have to pay the tax on the money withdrawn at his or her tax rate. RRSP legislation has eliminated most of the rollovers of funds into an RRSP that were previously « allowed. Those-currently allowed are monies paid as a retirement - allowance or severance pay, limited . to $2,000 per full or part year of employment plus $1,500 for each year prior to 1989 when no contri- . bution was made to the pension plan by the employer. Periodic pen- sion income in this case is defined as payments received from a’ ~ SOLGUARD FINANCIAL LTD. ~ Consultants & Brokers since 1974 Solguard Financial Ltd. is pleased to'announce to announce that _ TERESA BLACK HUGHES, C.F.P. has become, a partner i in the firm. Teresa has been the’ manager of the West Vancouver branch of Solguard Financial Ltd. since its opening in May 1991, She has over 15 years experience in financial services management. Teresa is active in the local community and is presently the Treasurer of the West Vancouver Chamber of Commerce. Registered Pension Plan ara Deferred Profit-Sharing Plan, This will allow you to split more of your retirement income with your spouse, which may result in your paying less tax overall once you retire, The Bottom Line is this: Speak to your qualified investment advis- er about income-splitting opportu- nities and spousal RRSPs. Thinking about this now is planning for the future you and your spouse can appreciate what you started years before. Russell Moldowan is an invest- ment adviser in Vancouver, He advises on investment management and retirement planning, Call or write to Russell at (604) 661-7475, P.O, Box 10342, Pacific Centre, Vancouver, B.C., V7¥ 1H6. Or by E-mail at russelln@unixg.ube.ca, Tax Reduction other than RRSPs? YES, through Mutual Fund Limited Partnerships! JIM PERKINS : ALB. & FLC.8. Vice Prosident “lmpurane inferno about Mutual Fund Led, Partnership is contained in the prospectus, Obtain a copy from your For more infor mation Financial Adviser and reud it carefully before investing CALL Ji PERKI 681-1300 “FORTUNE NAN CT #1750-1075 W. Georgia St. Solguard Financial Ltd. specializes in Retirement Income Planning and Estate Consulting. We bring personalized financial planning to every client, seeking to optimize spendable income. As independent consultants, we survey the market daily for competitive products from quality companies. : GICs, .AASPs, RRIFs, “Annuities, Investment Funds, Life Insurance t _ Offices i in Vancouver, West Vancouver, White Rock; Victoria | _. RICHARDSON GREENSHIELDS © , Suite 911 - 100 Park Royal South West Vancouver V7T 1A2- Phone: 981-2300... - Call us for a free RASP guide. 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