It is not unusual for clients to wait 20 years or longer before re-reading their wills or revocable trusts to determine if they still “work.” This occasionally creates expensive or frustrating problems. Continue reading
The closest Canadian equivalent to an IRA or 401(k) is the Registered Retirement Savings Plan, which is commonly known as the “RRSP.” Contributions are tax deductible, and tax is payable as distributions are taken, which may occur at any time. The maximum annual RRSP contribution is roughly 18% of earned income, up to a maximum of $22,000 CAD. At age 71, a RRSP must either be distributed or converted into a Registered Retirement Income Fund (or “RRIF”), which has characteristics similar to an RRSP except that no contributions may be made and there are mandatory annual withdrawals. The Canadian equivalent to a Roth IRA is the Tax-Free Savings Account (or “TFSA”). Contributions are not deductible, but distributions (which may be taken at any time) are not taxable.
IRA beneficiary designations are commonly overlooked, but incredibly important. In general, a will does not affect the destination of IRA monies at death; instead, the beneficiary designation controls.
IRAs, 401(k)s and retirement plan benefits are frequently the most valuable assets we own. A common assumption is that signing a will takes care of these items. It doesn’t.