A tax-sheltered savings account whereby any growth can be pulled out of the plan tax-free. Any transactions that take place in the account are not subject to tax. There are limits to the allowable contribution, but no limit to the potential growth.

What is it?

A way for Canadians over the age of 18 to put money aside tax-free throughout their lifetime.

Plan Features:

• There are limits to the annual contribution room which can be carried forward for any unused year.
• Growth is sheltered from taxes, even upon withdrawal
• Should there be an over-contribution, a 1% tax will be applied to the highest excess TFSA amount in the month for each month that the excess amount remains in the account.

Withdrawal Process:

Withdrawals made will be added to the TFSA contribution room for the following year.

TFSA Annual Contribution Room:

Be sure to keep track of your contributions and withdrawals to take complete advantage of this account.

A tax-preferred account whereby individuals are encouraged to save for retirement by receiving tax deductions for their contributions. Savings grow tax-free until the account is converted to a Retirement Income plan. Contributions are limited according to the individual’s employment income.

When an RRSP account is converted into a RRIF at age 71, the investor receives a yearly income from the savings that they accumulated tax-free previously. There is a minimum amount of income required to be withdrawn every year, depending on the investor’s age.

A “locked-in” version of an RRSP account, usually the result of a pension transfer. The investor is unable to make further contributions to the plan, nor to withdraw money from it until it is converted into a Locked-In Retirement Income plan.

A “locked-in” version of a RRIF account. A LIRA is converted to a LIF at age 71, and the investor receives a yearly income from the plan. The regulations concerning withdrawal amounts are stricter than in a RRIF.

Investors are encouraged to save for their children’s future in this plan. The federal and provincial governments will give up to 30% in education grants on all contributions made into this account. When the child is enrolled in post-secondary education, the money can be withdrawn to pay for school.

What is it?

• A method of saving for your child’s post-secondary education.
• RESPs can hold a variety of investments such as: High-Interest Savings Accounts, GICs and Mutual Funds.
  Plan Features:
• Don’t pay taxes on the growth of your money while it is held in the plan
• The government gives grants up to a lifetime maximum of $7,200/child known as the Canadian Education Savings Grant (CESG) up to the age your child turns 17.
• Lower-income families get additional government assistance known as the Canada Learning Bond (CLB).
• Some Provincial governments ALSO give grants. In Quebec we have the Quebec Education Savings Incentive (QESI), please verify with the Financial Institution you will be working with.

Withdrawal Process: (Please get in touch with your advisor to help with exact calculations)

• You need to provide proof of enrolment in college or university. Be sure that the document has the Student ID Number on it. It can be a class schedule, payment receipts
• If going to school the withdrawal will be taxed at your child’s tax rate (capital tax-free)
• Full-time students can withdraw $5,000 in grants & investment returns in the first 13 weeks of school. After the 13-week period, more money can be taken out.
• Part-time students can withdraw $2,500 in grants and investment returns for every 13-week period.
• Money can be used for tuition, books, computers, transportation or even housing.

QUESTION: What happens if your child decides NOT to pursue post-secondary education?

ANSWER:

• If you have a family plan, the funds can be used for the other beneficiaries.
• If you have an individual plan, you may be able to transfer funds to the beneficiary’s siblings’ plan.
• The money you have invested may also be withdrawn tax-free. The withdrawal (AIP) will not include the government grants.

Once the withdrawal happens you can:

1. Transfer up to $50,000 into your Registered Retirement Savings Plan (RRSP)
2. Transfer to the same beneficiaries Registered Disability Savings Plan (RDSP) should they
   have one in their name.

Simple withdrawals will be subject to penalties and withholding taxes at source.

A savings plan intended to help parents and other caregivers save for the long-term financial security of a person who is disabled. The federal government will pay grants into the account, the sizes of which depend on the beneficiary’s family income and the amount contributed to the account.

What is it?

• An RDSP is a great way to build the financial security of Canadians with disabilities.
• The beneficiary must be a resident of Canada, less than 60 years old, be a recipient of the Disability Tax Credit and have a valid Social Insurance Number.

Plan Features:

• Anyone can contribute to an RDSP as long as the account holder has provided written consent. Contributions grow Tax-Free
•  $200,000 total lifetime contribution for each beneficiary with no annual limits.
• The Federal Government can match contributions based on the family net income with up to $3,500/year in Canada Disability Savings Grants and up to $1,000/year in Canada
  Disability Savings Bonds
• Savings withdrawals DO NOT affect the federal and provincial income-testes benefits
•  The RDSP was started in 2008, meaning that Grants and Bonds can be carried forward. The carry forward is available as of the date of diagnosis or back 10 years from plan set-up.
• The maximum grant that can be received in one year is $10,500, Maximum Bond that can be received in one year is $11,000

Withdrawal Process:

Please get in touch with your advisor to help with exact calculations.

• Withdrawals MUST begin by the end of the year in which the recipient turns 60
• If withdrawals are made before the age of 60, the federal grants and bonds are subject to repayment to the government from the previous 10 years.

Canadian Disability Savings Grants (CDSGs) – Lifetime limit of $70,000/beneficiary

Canada Disability Savings Bonds (CDSBs) – Lifetime limit of $20,000/beneficiary

Using an Asset Allocation Model is a strategy that involves diversifying your investment portfolio across different asset classes such as stocks, bonds, and money market securities.

The Asset Allocation Model is essentially an effective method of diversification.

It is very important to link your investments to GOALS so that your advisor can create the best model for your financial situation.

Portfolio make-up is based on your time horizon and risk tolerance.

Long-term is a minimum of 5 years.

Mutual Fund managers typically stay with their set allocation and do rebalancing on an annual basis.

Based on Market factors. Usually consists of more actively managed funds

Mutual Fund managers typically review their placement once a quarter and rebalance according to the market situation.