BUS 329 Chapter Notes - Chapter 10: Registered Retirement Income Fund, Tax Deduction, Savings Account

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 329
• Professor: Susan Bubra

Document Summary

Registered retirement saving plans (rrsp) all individuals. Registered pension plans (rpp) employees only. Registered retirement income fund (rrif) all individuals. Taxable withdrawals: how much money did you put in today, will receive a tax deduction as soon as you contribute. Contribute ,000 for 30 years at 10% to rrsp: ,470 before taking out, ,359 after taxes at 45% (assume if in the highest tax rate) Save ,750 (,000 after taxes) for 30 years at 5. 5% (net: no deduction and pay taxes all along, ,198. Make contributions as early as possible: can generate an extra 10% in plan. Tax savings at retirement: depe(cid:374)ds o(cid:374) the i(cid:374)di(cid:448)idual"s (cid:271)(cid:396)a(cid:272)ket at (cid:396)eti(cid:396)e(cid:373)e(cid:374)t (cid:448)s. the (cid:271)(cid:396)a(cid:272)ket (cid:449)he(cid:374) (cid:272)o(cid:374)t(cid:396)i(cid:271)utio(cid:374) is made. Defined benefit: employer agrees to provide benefit of some per(cid:272)e(cid:374)t of e(cid:373)ployee"s a(cid:448)e(cid:396)age ea(cid:396)(cid:374)i(cid:374)gs fo(cid:396) each year of service, employer is at risk. Employee will get a fixed amount at retirement; therefore, employer must calculate how much they have to contribute for the guarantee amount.