Upon resigning from a company, if employer offers a lump sum pension payment of 100k, what are some ways to save on tax on this 100k? Assuming this 100k, is the only income that year, the RRSP room is only around 18k. Is there a way to save on tax on this pension lump sum payment? The situation arises when you leave a company before your retirement age and the only option the company offers is a lump sum pension payment.
I'm american and know little of Canadian law. I assume what I state here to be similar to American law...
I do not believe the "lump sum" of the distribution makes any difference. If you earn 100k in 2016, you earn 100k in 2016...whether you earned it on May 16th, or on every Monday in 2016. Taxes, I'd presume would be the same.
I'd look to see if you can roll the lump sum distribution into some sort of private retirement savings plan. Like an IRA in the U.S.
Also, is the person receiving the lump sum of retirement age?