December, 2009
Volume 2, Issue 7
In This Issue
MFG FINANCIAL DISPATCH
A Monthly Publication of MacIntosh Financial Group Ltd.
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Win One of Two $25 Starbucks Cards
Bits and Pieces
Win One of Two $25 Starbucks Cards
Just in time for Christmas we’re once again giving away a $25 Starbucks card to each of two lucky people.
Simply click on the word “WIN”,
answering just four TWO multiple choice questions based on
information in the articles in this newsletter. If yours is one of the
two names randomly drawn from the correct entries, you win a card – it’s
as simple as that.
We want to congratulate Suzanne Humphreys and Robyn Wessels, our two Starbucks card winners from the November draw. This month’s draw will happen on December 18th. All the best!
RRIFs 101
Last month we looked at the different options you have in dealing with your RRSPs when you retire.
The most common and most flexible option is to convert your RRSP to a RRIF (Registered Retirement Income Fund). We’re going to look at the basics of RRIFs and try to answer some of the most frequently asked questions about them.
When can I convert my RRSP to a RRIF?
By the end of the year in which you turn 71, all of your RRSPs must be collapsed and as discussed previously, can be converted to a RRIF. There’s no requirement to wait until retirement and an RRSP can be converted to a RRIF at any age.
What investments can be held within a RRIF?
Within an RRSP you can hold a variety of investments such as GICs, mutual funds, stocks and bonds. You can hold the exact same investments within a RRIF. In fact at the time you’re ready to convert your RRSP, the investments within your RRSP can simply be transferred “in kind” into your RRIF. Depending on your portfolio and your tolerance for risk, it may make sense to allocate a higher portion of your portfolio to income-producing investments at that time.
How much income can I take from my RRIF?
Canada Revenue Agency (CRA) requires that you withdraw at least a minimum amount each year and add the withdrawn amount to your income for tax calculation purposes. The minimum amount is a percentage of the market value of the RRIF on December 31st of the previous year. The percentage is determined by your age and goes up each year. If you only take the minimum amount each year the schedule is designed to effectively deplete your RRIF account by around age 100.
Beyond the minimum you are free to withdraw any amount up to the 100% of your RRIF at anytime. Remember though that any amount taken from your RRIF is added to your income in the year of withdrawal.
What happens to my RRIF when I die?
As with an RRSP, you can name a beneficiary on your RRIF account. If you name your spouse as the beneficiary, the RRIF transfers to your spouse without any tax consequences. If you name someone other than your spouse, the full amount of your RRIF is taxable as income in the year of death and the tax is payable by your estate.
This has been a very brief overview of RRIFs but as always, if you have any questions or would like more information on RRIFs and the part they may play in your financial plan, please call us.
Bits and Pieces
Our Holiday Office Hours
Our offices will be closed for the Christmas Season from December 24th until January 4th. We will however monitor email and voicemail in case any urgent issue arises.
January Payments from MRS RRIF and LIF Accounts
A reminder that as in previous years, January RRIF and LIF payments may be delayed beyond January 15th. All the minimum payments need to be recalculated and this sometimes delays payments for up to a week or more.
Jim Rohn
Last month we included an article entitled “The Formula for Failure and Success” by Jim Rohn. Jim Rohn has been one of the most influential business philosophers and personal growth gurus of our time. We were saddened to hear that Jim Rohn passed away last week on December 5th at the age of 79. He’ll be missed but the body of his work is likely to live on for generations to come. If you’re interested you can read the tribute to him at http://tribute.jimrohn.com/
MFG Financial Dispatch is our monthly email newsletter designed to keep you up to date on timely financial issues that may affect you and to pass on timeless information and advice regarding financial issues. Archived issues are available in the Client Centre on our website (macintoshfinancial.com).
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Our website address is macintoshfinancial.com . If you are on your smart phone you can also find our contact information on our “.Tel” page at macintoshfinancial.tel.
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