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Lecture 6

Actuarial Science 1021A/B Lecture Notes - Lecture 6: Registered Retirement Income Fund, Lump Sum, Life Annuity


Department
Actuarial Science
Course Code
AS 1021A/B
Professor
Steve Kopp
Lecture
6

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Annual RRSP contribution limit:
= A + B + C + D
A= unused contribution room from previous year
B= [lessor of (18% of income, max. for that year)] - PA
C= PAR for the year (pension adjustment reversal)
D= net PSPA for the year (past service pension adjustment)
Example 1: 2012
-2011 earning = $110,000
-PA value = $5000
-2012 RRSP contribution = $12,500
A=0
B= min of ((0.18)110,000)=19,800 or 22,970 all minus 5000
=19,800-5,000
=14,800 (max limit for 2012)
14,800-12,500
=2,300 (carry forward for 2013)
2013
-2012 earnings = $150,000
-PA value = $6,000
A=2,300
B= min of ((0.18*150,000) or 23,820 minus 6,000
23,820-6,000=17,820
17,820 + A= 17,820 + 2,300=20,120
Homework:
Example 2
What is carry forward for RRSP for 2014?
Year
Earnings
PA value for the year
Actual RRSP contribution
Left over contribution
2010
$130,000
$22,000-PA
$5,000
2011
$115,000
$8,750
Own: $9,000
Spousal: $6,000
Max: $13,700+5,000=$18,700.00
$3,700
2012
$104,000
$9,100
Own: $13,500
Max: $11,600+$3,700=$15,300.00
$1,800
2013
$100,000
$8,050
Own: $10,000
Max: $10,670+$1,800=$12,470.00
$2,470
Lifelong learning plan
1)
-up to 20,000 can be taken tax free for tuition and books
-Max yearly of 10,000
Exceptions for paying taxes on RRSP's:
Module 2: Sept 22, 2014
Monday, September 22, 2014
3:34 PM
Actuarial Sciences Page 1
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