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Home My WebLink AboutThe Goderich Signal-Star, 1987-02-18, Page 11OW' Saving, The MONY Equity Fund. §119.640 average. annual compound return lur Ih1 1,1,1 ®1111111 ).1f1• 111,11N 1111 ,1! . 1111 I,,l1)1, (1(1111, f SS,,II 11) II1 1 llvi 1111 '',,In ill 11171, NUUldi,.l,t' mirth rth 'y 2131,21 , 11,11,1 Mr—) 111 1111,1 ,,r1L',In,ll 111\1',tlln'I11 I, guaranteed. INNo front end Toad 111,arg,' ,,II \uul )111 MI's, 1, III\t',tl'll I1111111'111•111'I\ 1111 Mil ®1i,u I,t'cl l>\ \t( )'`1 1 111,1111 1,11 ',co, 11 o, 1‘1111 \ulMh\Illr ,I l t'. ui u\1'I 'trl:I j 13111,111 ,( 1)ti' RRSP Eligible 'tin\ .10 111'1, to NIA iii 1111311 I',1,I 11'111111, l ,1.1111111 111' t un,fnnv ,1, ,t >;u.u.tnlrr ul It11 tn1' 01.11111 111,11111'' nl. ul ( ,11,1(1,1 1.6.. 1\\ iJNVESTMENTS INSURANCE AGENCY LTi; The Financial Centre, 12 2 The Square,•Goderich 524-2773 1-800-265-5503 A werin : S e c questions a out Although most financial institutions pro- vide printed information about HRSPs, much of it is slanted towards the more knowledgeable investor. And even the ex- perienced purchaser can•be confused by some of the technical language used. Following, are answers to some of the more basic questions commonly' asked by individuals purchasing I{HSI's - in every- day language: Who is eligible to buy an RRSP? If you're a Canadian taxpayer with "earned income,'' you may purchase an RRSP up to the end of the tax year in which you turn age 71. If you do not ha''e any earned income, you are allowed to open.an RRSP in your own name by having your spouse make contributions even if he or she has already reached the maximum age limit. What is earned income:' It is the total of all money you have received from wages, salaries, bonuses, commissions, self-employed income 1 after • deductible expenses 1, pension and disabili- ty benefits, alimony. and Maintenance, rent and several other" sources of income after you have subtracted your unemploy- ment insurance contributions, . union or professional dues and employment ex- penseductions for the year. Your local taxation office can provide you with a form' that will help you deter- mine your earned income and how much you can contribute to•your RRSP. , What about investment income and capital gains? S Neither investment income nor taxable capital gains are considered earned income. How much eau I contribute in a year? If you are self-employed or are not a member of a registered pension plan, you may contribute either 20 per cent of your earned income or $7,500 - whichever is less. If you do belong to a registered pension plan and both you and your employer con- tribute to it, you are allowed to invest up to 20 per cent of your earned•income or $:#,500 -•- again, whichever amount is lower. But first you must subtract the amount of money you put into your company pension plan. , If your employer made all your pension plan contributions, you don't have to worry about this; just follow the 20 per cent/$3,500 maximum formula. If yeti currently are receiving payments from 'a company pension plan, old age security or the Canada Pension Plan, you may contribute all of these payments over and above the maximum allowable RRSP contribution limits, however, ybii cannot include these amounts when you figure out your earned income. Am I allowed only one RRSP?• • No. You inay own as many as you like, proylding the total•eontributipns you make to all of them d(i not exceed the maximum allowable limit. Once I have an RRSP, do I have to keep making contributions? _ • No. If you like,' you can. open an RASP New RRSP le islation has significant chanes By Peter Shephard you believe, that interest rates will rise It seems even' year in. February' Cana- later in the year.bin 1988 then choose a dian taxpayers are faced with a bombard-. shorter terra it or 2 yrs 1 ora savings type. meat of 'information concerning RRSP's. of RRSP. The game plan, of course, would '1'he result, for many; is theannual confu- he to lock your contribution into a loner sion about how much to contribute, when " terra when the -rates are more appealing. to Contribiq and to what type. of plan. This • An I{I{Sl' should be uncomplicated, as year is the start of new legislation for this• money will• be your retirement in-• ,RRSP°s and there are some very signifi- .come„find a plan that can provide a solid *----earrt-ehan ;es ir�>ecus-tiKlg•- a rtnot--la•r ii"te-d-to .:_--return. on your jnyestinent t compounding the following: ' a of interest•.works w:.ondersi w h either`no• Unused RRSP contributions may be carried forward for seven years :starting in 1988. ' ' . Revenue Canada to' inform -all tax- payers in Nov, of 1988 of their contribution limit for the '88 tax year and then yearly notices thereafter. • • Pension transfers •to F{RSP's, will not be allowed after 1989. ' 'No longer do•y'ou have to wait until 60. yrs. of age to• buy an ..RRSP annuity or RRIF. , . ' Contribution limits are changing with the 1986 tax year.' . - . ' • The most.important of ,the above for the, '86 and '87 tax years is,' of Course, the in- crease in contribution limit from $5500. to $7500. for those taxpayers not belonging to a pension plan. The $3500. limit, for those who do• belong to a pension plan •has not changed,' As far as when to contribute, it is , generally agreed the earlier the better. If fees or fees that you can live with. The in- come tax rules change from time to•time ' but at the moment many experts recom- mend keeping your RRSP's in fixed in- come .instruments while owning equities, especially those paying dividends, outside your RRSP. The rationale here is that with • equities•in your plan lose the benefits of the dividend tax credit and capital gains exemption, and never wake another contribution. What is a spousal RRSP? It is simply an RRSP in which the holder's spouse makes the contributions. Contribu- tions to both your own and your spouse's RRSP must not exceed your annual limits. What happens to the money in my RRSP? That depends on the type of RRSP you puri.'hase. It !night be invested in term deposits mutual funds or a variety of other invest- ment vehicles. When youopen your RRSP, you determine where your contributions will be invested for that year. ' Am I allowed to withdraw part of the money in my RRSP:' Yes — as much or as little as, you like. However, all of the money which you withdraw must be declared as income for • that tax year. Is it possible to borrow money from my RRSP'' • With one exception, no. The exception to the rule involves- granting yourself a mor- tgage, but the regulations are very complex. If you are interested in this area, you should talk to your tax officer or the finanical in- stitution which handles your HRSPs. What happens if 1 die while.I still have an RRSP? There are two possibilities: 1. If the beneficiary named for your RRSP is'ydtir spouse and you die before age 71, he or she can either take the money 1 and declare it as income 1 or transfer the funds into his or her own RRSP. If your spouse is not eligible for an RRSP he or she must cash in your plan or pur- chase an annuity with it. 2. Iftyour HISP beneficiary is someone other than your spouse, .the funds will be taxed as part of your income for that taxa- tion year and what is left over. Will go to your estate.' If you have named dependent c'hil'dren or • grandchildren as beneficiaries, the fund ' will form•part of their taxable income. GODEHI('H SIGNAL -STAR, WEDNESDAY, FEBRUARY 18, 1987—PAGE 11 Don'tinvest in an efo ...knowing the advantages of Retirement Annuities • from The Ccs -operators. Defer income taxes and establish -a guaranteed retirement income with a Regititered Deferred Annuity frQrn The Co (.)perators. Consider these advantages: • '1. Convert your Plan to•a lifetime:annuity, the only method ®f guaranteeing an 'income for life and.only available from a life insurance corhpany. 2. No fees at start or finish of Plan. 3. Your choice of variable interest rate or guaranteed interest rate. 4.' Your savings are secure; guaranteed by Co-operators Life Company. Get a head start on a secure tomorrow - talk to The Co-operators today. . .' LET OUR R ySP'S- help yoli.l achieve F H EEuONr55 For details Bail JIM PQWIE London Lief 0. the' Insurance ` Services 172 ONTARIO.ST., STRATFORD 524-6659 271-1920 Jim Bell GODERiCH: 31 West Street. 524 2138 LWEHOME -AUTO' CMMERCiAL- FARM ' TRAVEL NEWS ADVERTISING CLASSIFIEDS 524-2614 Confused about which RRSP is right for you? Ask Standard Trust about a FLEXPLAN RRSP 'lax' benefits today.. while you take advantage of a better rate tomorrow. ight now . maul\ tinancaal institutions circ :ufi- all offering mem much the same rate of interest But that;s 1(((1:11 rate \\ hat happens if interest rates go inti after \larch I - and \our mono is tied up at Olda\'s rate 1011'\c lost out on that c\tr.( interest ‘or 1f von open a Standard •I'rt•st Retirement Sa\ 1ng„, \rcnunt • the I'I:I:N- I'I. \N RRs1' lour mono isn'tlocked in It earns c orient interest rate's cath din the sante ati am s:i Ines accutntt • •lhcn '\ hen interest rates go up, \ou can ion\vri \our Fi.I:N1'1.\N RRSP into ,1 :,1:m,lard'I'rust GI(; R.RSI' - In\e',tt11g\our mono for llhtothe\e:ts.it,111111111i11g/i('rrate ofintr'rc.%1 10 mater \ our mono make the const tar \uu :it lite hest Unto . So. don t lust automatic all\ hu\ :111 RRsf \\ hurt \ou do \otir pinking shop around \nd make sure Standard Tru.( 1s nn \nor ,hopping list \nd compare these other Standard (rust standard feat ere. NO FEES \h'ottucl\ no adnlinietration, acgiusiUun 111 r1'th'nil\tt111i tees APPLY BY PHONE \\old last-minute \\c do all du' paper\\ork :ul(1 sign )(111111N1 «)111c I(1 INSTANT TAX RECEIPT gnu I;I"t \aur ta\ rt'e'etpt the r,:l111(' da\ ,\oil silt' s11 \nu can file \our rc:t:rn the santy dal STANDARD TRUST \I, 1,11„ , ..11 1111,1.1 I1, 1,.,..1 1,1,1r ,,,1, •n., •.. 138 The Square, Goderich or call the RRSP Hotline 5247385 AN,n1,111.11ylctun,t,Ind ;1 ( rn„tcoComp.lny Please ta us first ' before y04 make a commitment :with any other finandda$'in$titution. BRING THIS COUPON TO THE NATI9NAL TRUST BRANCH NEAREST YOU AND "WE PROMISE” YOU WILL RECEIVED at The latest facts on RRSPs 2e Friendly, knowledgeable and courteous service 3® The National Trust "FinanCial Planner" brochure FREE Of CHARGE. There's a National Trust branch conveniently located near you. Come in or call us today. GODERICH 100 KINGSTON ST® 524-7301