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63

Congratulations on an amazing rise on salary. Please pat yourself on the back for such an accomplishment. The best thing you can do is to hire a competent tax specialist. Here in the US, it is typically an accountant and they would tell you that there is not much they can do. Maximizing tax favored retirement accounts is about the best one can get away ...


11

The root of the advice Bob is being given is from the premise that the market is temporarily down. If the market is temporarily down, then the stocks in "Fund #1" are on-sale and likely to go up soon (soon is very subjective). If the market is going to go up soon (again subjective) you are probably better in fictitious Fund #1. This is the valid ...


7

My opinion is that in general, it is probably not a good idea to borrow at a cost in order to make your RRSP contribution. Banks, of course, have an interest in loaning you money. Don't expect their literature to be objective on the matter! They are selling you a product and the advice is biased. What better way to double-dip than to get guaranteed ...


7

Minimizing taxes at your scale is more an exercise in determining which activities the government decides to tax less rather than an exercise in finding clever loopholes to exploit. You lack the resources (and the tax burden) to make use of the more intensive tax avoidance strategies in a feasible or efficient manner. Sorry, but no tax havens, no accountants,...


6

For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up ...


6

Your question is based on incorrect assumptions. Generally, there's no "penalty", per se, to make a withdrawal from your RRSP, even if you make a withdrawal earlier than retirement, however you define it. A precise meaning for "retirement" with respect to RRSPs is largely irrelevant.* Our U.S. neighbours have a 10% penalty on non-hardship early withdrawals ...


6

It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost ...


6

That expense ratio on the bank fund is criminally high. Use the Vanguard one, they have really low expenses.


5

When you withdraw from your RRSP, you lose that contribution room and you will never get it back. Let's say you have room to contribute a total of $50,000 to RRSPs. If you withdraw $5000 from one institution and deposit it in another, you will now have a total contribution room of $45,000. This will only matter to you if you hope to max out your RRSP ...


5

IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game ...


5

There is a tax treaty between Canada and the US that recognizes RRSPs as retirement accounts. You won't be taxed on the gains in your RRSP like you would be if it was in a TFSA. So you don't really have to do anything (except fill out a form for the IRS every year). The problem that usually arises is if you want to buy something else. I don't know of ...


5

No. Income inside an RRSP is sheltered from income tax until you withdraw it. That is, indeed, the major benefit of RRSPs. Note that you will eventually declare this as income. Consider the following case: - in 2015, you make $1000 in income. - in 2015, you contribute $100 to your RRSPs. You store this in an account that pays interest, rather than investing ...


4

You can defer RRSP deductions like you've suggested. Here's an article from the CBC about it: http://www.cbc.ca/news/business/taxseason/story/2010/03/15/f-taxseason-delay.html


4

You can transfer a 401k to an IRA and then to an RRSP under the following conditions: You must have been a resident of the U.S. when the contributions to the plan were made The withdrawal must be a lump sum payment The withdrawal must be taxable in the U.S. The IRA withdrawal will be viewed as a transfer only from Canada's perspective....


4

@DJClayworth mentioned the spousal RRSP, and that's a good option if you are the one with available contribution room and/or you want the tax deduction in your name. But, a spousal RRSP account needs to be separately established. That is, you can't contribute to your spouse's existing regular RRSP account while at the same time using your contribution room ...


4

IMO this means one of two things: the bank thinks that 3 months from now, the interest rates it plans to offer will be lower than 1%; after 180 days, it will go up again. the bank needs more short-term cash than mid-term cash right now, so it offers you a better deal. In either case, it is unlikely that your 90 day intrest rate will be available 90 days ...


4

There are some circumstances in which it is a good idea. Chris W Rea has already mentioned the case where you expect your marginal tax rate to decrease. But there is also the case where lack of contributions might cause your marginal rate to increase. Assume your income is $20,000 over the 46% threshold, and you normally contribute $20,000 to RRSP. However ...


4

not having ever filed anything with IRS Up to $100,000 (one hundred thousand) penalty per account per year that you willfully neglected to report. If there's also tax evasion - it can jump up to much more + jail time. withdrawing $33,000 in one lump sum Not sure how RRSP are taxed. May very well be taxed as PFIC, since they're supposed to be taxed as ...


4

If you withdraw money from an RRSP, you are taxed on that money as ordinary income and will have to pay withholding taxes, and potentially more income tax when you file. Additionally, you lose that contribution amount. If you subsequently deposit the same gross amount into another RRSP at a different bank, that will lower your taxable income for the year ...


4

For any accounts where you have a wish to keep track of dividends, gains and losses, etc., you will have to set up a an account to hold the separately listed securities. It looks like you already know how to do this. Here the trading accounts will help you, especially if you have Finance:Quote set up (to pull security prices from the internet). For the ...


4

Generally it's about 18% of your lifetime taxable earnings but there is a maximum for each year so this isn't an absolute. If you do not have a copy of your notice or a T1028, you can find out the amount of your RRSP deduction limit by going to My Account, Quick Access or by calling our automated TIPS RRSP service. For more information, see My Account ...


4

How would the RRSP know where the money came from? You have two separate financial operations going on: You invest some money, within the limits set by the law, in a Tax Free Savings Account. Near the end of the year, you take the money, plus interest, out of the account. As you may guess by the name, you need not report the interest as income. There are ...


4

Considering that the market has grown consistently in the macro sense (the regression curve slopes up) the market is often at an "all-time high". So the only reason you would not want to invest in equities is if you have a short investment horizon and think there is a correction soon, in which case you'd buy when equities are down relative to today. The ...


4

Think about it this way: you are considering giving up a 100% guaranteed return [contribute 5% of your salary, get 5% for free from your employer] to avoid a 1.5% management fee. You would be giving up a net return of 98.8% above your current investing mechanisms. So now consider that 98.8% against the non-financial factors: lack of control, vesting, etc.. ...


4

If you own any works of art or ecologically sensitive lands you can donate those to a city government/museum/conservation trust/accredited charity and receive a tax refund for the appraised value of the donation. This would only net you a tax benefit if the appraised value was greater than what you spent, but it would deprive the government of money if that'...


3

For pure retirement savings, with an expected tax bracket drop at retirement, then RRSP's make the most sense. So if you are in the 29% bracket (~40% when you take the provincial component) then you invest $1000, and save $400 in taxes. When you withdraw it later on, you might be in the 26% bracket (36% with provincial) so you would owe $360 in taxes. ...


3

Yes, the extra matching contribution your employer puts into your group RRSP plan is considered employment income and so yes it would be included in the income reported on your T4. However, you should also receive from your RRSP plan administrator a contribution receipt, and the amount on that receipt should include both your contributions and the $500. ...


3

More complications... When the provisions of FATCA go into effect for financial institutes in Canada (July, 2014?), the institution holding your RRSP and LIRA may, if they know or suspect that you are subject to US taxation, be required to supply the IRS with FBAR-type information on you and your accounts annually.


3

I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too ...


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