Posted at 10:00 a.m.
Retirement or disability, no matter why you need to withdraw money from your Registered Retirement Savings Plan (RRSP), the rule remains the same: you will be taxed on your total income after credits. tax. “The RRSP is deferred consumer savings. The reason why you withdraw your RRSPs is not considered a mitigating effect in the calculation of your income according to the government,” explains Denis Preston, professor at HEC Montréal and financial planner.
To get the most out of your RRSP, you have to withdraw when your tax rate is minimum. “You should not withdraw more than the amount you need, because the sums in the RRSP are not infinite. Also, there are some questions to keep in mind. What is your life expectancy? Do you have children? What is your heritage? It’s not up to the planner to decide, but up to you to assess the right price to achieve your goals. Our role is to assess the impacts, and this is not a simple question. So many variables come into play,” explains Marie-Frédérique Savard, financial planner and general manager of Plandaction.
Several provisions allow shareholders of Fondaction or the Fonds de solidarité FTQ to have access to their savings in more difficult times, for example, but the tax rules will still be the same.
Short-term financial resources
Before withdrawing money from your RRSP, it is important to consider other resources such as employment insurance sickness benefits or disability insurance. Again, Line Moreau, CPA, puts a damper on these solutions. “Employment insurance doesn’t last forever, and disability insurance doesn’t cover all illnesses. It is also expensive; the trick is to start signing up early. As a solution, she recommends seeing a doctor to get the Disability Tax Credit (DTC).
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
Line Moreau
It is not the name of the disease that determines DTC eligibility, but rather the disabling effects that result from the disease.
Line Moreau, CPA
The RDSP option
Why is this credit so important? Because it can entitle you to various assistance measures and, above all, it gives access to the Registered Disability Savings Plan (RDSP). For people under 49, it allows you to save and benefit from the Canada Disability Savings Grant (CDSG) to improve your capital.
Guillaume Parent is president of Finandicap, a firm specializing in financial services for people with disabilities and disabilities. Nearly 10% of its clientele is made up of people who have to live with a disability in the middle of their life. Born with cerebral palsy, he recommends patience to people considering applying for the DTC.
PHOTO DOMINICK GRAVEL, THE PRESS
William Parent
Half as many people in Quebec apply for the DTC as in the rest of Canada, either through ignorance or discouragement. The difficulty is that very few people will talk to you about your financial situation when you have health problems that affect your daily life and also because there are a lot of forms to fill out.
Guillaume Parent, Chairman of Finandicap
For him, support is essential, especially with regard to the sums involved. silver. Offered to people with a low income, it is an annual grant of $1,000 up to a maximum of $20,000 for life. As for the CDSG, it is paid according to the beneficiary’s family income and according to the amount contributed to the plan, up to an amount of $3,500 to reach a maximum of $70,000 for life”, he underlines. .
One thing is certain: Guillaume Parent warns that there is no recipe book or rainbow when living in such a situation. “You have to make a huge reset on your financial plan and rethink your strategies. »