Can I take money out of my RRSP without paying tax?

The short answer - no! Anything you redeem from your RRSP must be claimed as income in the year that you make the withdrawal. The financial institution is also required to withhold and remit taxes to CRA on the RRSP account holder's behalf. The amount required to be withheld is determined by the withdrawal amount. 

There are two exceptions to this rule - 1)The Home Buyers Plan (HBP); 2)The Lifelong Learning Plan (LLP). 

1) If you meet CRA's criteria as a first-time home buyer, you are able to withdraw up to $35,000 from your RRSP for a qualifying home purchase without including it as income. The catch? You must pay back the amount taken over 15 years beginning in the second year after the year you withdrew the funds. Once the repayment period begins, each year you must pay 1/15 of the amount you withdrew through the HBP. Repayments do not qualify as new RRSP contributions and thus do not count towards your unused RRSP room nor would they reduce your income.

2) You can withdraw up to $10,000 in a calendar year from your RRSP for full-time education or training without including it as income. There is also a maximum withdrawal limit of $20,000 each time you participate in the LLP. The time frame for when LLP repayments must begin is more complex but they must be repaid over a period of 10 years. Each year, you must repay 1/10 of the amount you withdrew through the LLP. 

Please visit the CRA site to learn more about both the HBP & LLP programs.

What happens to my retirement accounts when I start drawing on them?

A RRSP (Registered Retirement Savings Plan) is considered a savings plan. When you wish to begin regularly receiving income from the assets in your RRSP you would convert the account to a RRIF (Registered Retirement Income Fund). While you do not have to convert your RRSP to a RRIF immediately upon retiring, you are required to do so by the end of the year in which you turn 71. Once you convert the RRSP to a RRIF, there is a minimum payment amount you have to take out of your RRIF account every calendar year beginning in the year in which you turn 72. The minimum amount is calculated as a percentage of the RRIF account value at the beginning of the year. The percentage is based on your age at the beginning of the year.

Similarly, a LIRA (Locked-In Retirement Account) is required to be converted to a LIF (Life Income Fund) by the end of the year in which you turn 71. The LIF also has a minimum payment amount that you have to take out of the account every year beginning in the year in which you turn 72. However, a LIF also has a maximum payment amount that you can take out of the account every year. Both the minimum and maximum amounts are calculated as a percentage of the LIF account value at the beginning of the year. The percentages are based on your age at the beginning of the year. 

I have Long-Term Disability (LTD) insurance thorough my employer - am I fully covered?

Firstly, consider yourself lucky to have LTD coverage through your benefits plan as this extremely valuable benefit is often an overlooked component of an employer's compensation offering. However, it is also important understand and know the limitations of your LTD coverage through your benefits. What should you look for?

1) Check the definition of disability -  Many group benefits LTD plans include a two year own occupation definition at which point the definition of disability changes to any occupation. What does this mean? In simple terms, after two years, you may be forced to seek employment and come off claim even if your disability doesn't allow you to return the occupation you were in prior to going on LTD. 

2) Are there maximum limits on income? - Typically, group benefits LTD plans provide a monthly income benefit up to a maximum amount. This maximum amount may or may not cover your monthly income needs if you were to become disabled.

3) Is there coverage for things such as partial disability and cost of living adjustments and what is the benefit period? - What happens if your disability allows you to continue working in some capacity but at reduced hours or duties? Is there inflation protection on the income benefit? Does the benefit period cover you to age 65?

These are all examples of things to be mindful of when you are considering your LTD needs. A personal LTD policy can be used to compliment your group coverage and fill any gaps where you might be exposed.

How to have "The Talk"....

No no no, we aren't talking about the birds and the bees. 

The conversation we're referring to is what you want to happen to yourself and your assets at end of life. Talking about death with your family can be traditionally thought of as being taboo, however, communicating your wishes can reduce stress for your loved ones during a time of grief. Tips for having this conversation:

1) Be clear and concise - leave no detail up for debate in terms of what your intentions are.

2) Discuss both care and property - Make sure your loved ones know what you want to have happen from a personal care standpoint and also what you want to happen to your property. Property includes both your monetary assets and sentimental heirlooms. Heirlooms can often cause the most severe family discord when intentions are not made clear.

3) Put it in writing - This doesn't excuse you from having "The Talk," but having a will ensures your wishes will be fulfilled as you intend them.

4) Revisit the conversation regularly - Intentions change and memories fade. Make sure you communicate any major changes to those that will be involved with and have roles of responsibility with your end of life.

5) Make everything accessible! -  Organize all relevant documents including will's, POA's, insurance policies, investment and bank statements, important passwords, etc. Put them in place that is accessible and known to your executor to ensure they have everything they need to handle your estate.