January 2014 Newsletter
RETIREMENT INCOME PLANNING
Canada Pension Plan, CPP
Old Age Security,OAS
The Old Age Security, OAS, is paid from general tax revenue and is not based upon your contributions. If you meet the residency rules and are at least age 65, the maximum basic OAS pension will increase from $550.99 to $551.54 per month. Click here for more information.
The age of eligibility for OAS pension will gradually increase from 65 to 67 over six years, starting in April 2023. If you were born in 1957 or earlier, you will receive the amount shown at age 65, however, the payment start date is gradually deferred for the years 1958 through to 1962. Those born in 1963 or later (1964, 1965 etc) are not eligible for OAS until they turn age 67.
Tax Free Savings Account, TFSA
The Tax Free Savings Account, TFSA, allowable limit increases by $5,500 in 2014. Therefore, the total allowable contribution is $31,000 per individual who was age 18 or older in 2009.
The individual limit is not based on your earned income and you do not lose the contribution room, if you do not contribute.
Registered Retirement Savings Plan, RRSP
The Registered Retirement Savings Plan, RRSP limit is determined on an individual basis. The 2014 RRSP contribution limit is the lesser of 18% of earned income for 2013 to a maximum of $24,270. There are several adjustments that may apply to your personal situation. Here is a simple example. Jane Doe has earned income of $50,000 for 2012. Her RRSP deduction limit is calculated by taking $50,000 and multiplying by 18% which equals $9,000. The 2013 RRSP deadline is March 3rd 2014!
If you cannot contribute the maximum to either RRSP of TFSA, which plan makes more sense? Read my article entitled, “TFSA versus RRSP“.
What’s Your Risk?
Ontario Power of Attorney Kit
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