Saturday, June 16, 2018

What happens in year of death


Question:

It would be helpful to understand in some detail what the Retireware processing and assumptions are for the year of death. This is particularly so in the case of death of one spouse years before the other in a joint plan. I haven't come across this documented anywhere, and am having some difficulty interpreting our plan results.

There seem to be a range of options in the real world, particularly for the registered funds, which can be transferred to the surviving spouse without taxation.

I guess one approach for the program, the most conservative case, is to handle the death of one individual as an independent event - the remaining balance of registered funds are liquidated and the full value taxed, and the non-registered investments are liquidated and the realized capital gains taxed. The total resulting after tax value can then be handled in a variety of ways.

Then if by will and/or legal requirement some or all of that remainder is left to the surviving spouse, then that amount can be explicitly added by the user (ie me) back into the estate of surviving spouse as special case income.

In any event once I better understand what the program is assuming then I can do whatever is necessary to handle the numbers as per the will and estate plan.

Answer:

It's as you describe, on the first death, registered and locked-in funds flow tax-free to the surviving spouse. For non-registered funds and property other than the personal residence, the after-tax value goes to the surviving spouse. So it's assuming that the spouse leaves everything to his/her surviving spouse. There is no option in the program to allocate a portion of the estate currently.

Tuesday, June 12, 2018

DIY Version


Questions:

Looking for retirement planning software for personal use, but with a level of sophistication. Does your software:

  • Perform detailed tax calculations based on the Canadian Income Tax Act?
  • Support income by type (earned income, investment income – dividend [Cdn and foreign], CG, CPP, OAS, etc)
  • Track assets over multiple investment accounts – registered, non-registered etc.
  • Allow for multiple family members (husband/wife) and track them separately (especially for tax purposes)

Answers:

Yes, the tax calculations are accurate. The type of investment income calculated depends on your asset allocation. Based on this, the program allocates investment income among interest, dividends and realized and unrealized capital gains.

Your assets are divided according to type: registered, locked-in, TFSA and non-registered. You cannot enter each account separately (for example, if you have two RRSPs).

The program calculates other types of income such as pensions, CPP, OAS. However, it does not show separately the various types of investment income year by year, only as a whole.
You can do a combined plan for you and your spouse.

If you subscribe, you will get a refund within the first 30 days if it does not meet your needs. In order to get your refund, simply email support@retireware.com.

Thursday, June 7, 2018

Locked-in Funds in New Brunswick


Question:

I have a plan with locked-in funds under the New Brunswick pension legislation. It shows that LIF income will be over $12,000 in her first year of retirement, but the max allowable is around $8500 in for a NB legislated plan.  Can you explain how the program appears to allow for more than the max allowable amount?

Answer:

The maximum is higher in 2017 because the program uses in this case the one-time maximum special withdrawal rule in New Brunswick pension legislation of the lesser of 3 times the maximum or 25% of the account value to meet the retirement income goal.

Saturday, June 2, 2018

Defined Benefit Pensions


Questions:

For the section that asks this question:

"Savings in Addition to Employer Plans - Annual Amount Saved in Registered and Non-Registered Assets"

Should I be calculating this as including the amount that goes into the Defined Benefit plan since that reduces the RRSP amount that I can contribute? i.e. the amount here = Defined Benefit + my RRSP contributions + TFSA contributions

Answers:

You should enter the defined benefit contributions on the Pensions page on the Current Employer Plan tab. The program figures out a pension adjustment that reduces the RRSP room based on the estimated annual accrual calculated for the defined benefit pension.

The amount for this field is any savings for retirement purposes  other than through an employer pension, including Group RRSP, defined benefit, defined contribution.

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RetireWare is a Web-based risk management and retirement planning software for individuals and financial advisors that's easy-to-use, full of rich visuals and comprehensive analysis. Try today and take advantage of our unconditional money-back guarantee. Know how much retirement income you can have. Build a plan and know where you stand.

Equisoft Inc.

Founded in 1994, Equisoft offers advanced digital business solutions to its clients in the insurance and wealth management industries to support their growth. The firm develops and markets innovative front-end applications (InsuranceElements and WealthElements) featuring industry-leading user interfaces and state-of-the-art technology.

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