Author Topic: pension income splitting under age 65 to get pension credit  (Read 333 times)

bluebelle

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pension income splitting under age 65 to get pension credit
« on: September 25, 2017, 08:48:09 PM »
My spouse will have a defined benefit pension starting at age 55.

Questions:
1. does that income qualify for the pension credit at age 55 instead of 65?  Which is discriminatory to those who do not have a pension are are self funding their retirements.
2. can we use income splitting of some amount of that pension to enable me to also receive the pension credit.  Not a huge credit - but hey, if I'm entitled to it, I want it.  Since my retirement will be self funded through RRSPs/RRIFs, I will not have eligible income until age 65.


Goldielocks

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Re: pension income splitting under age 65 to get pension credit
« Reply #1 on: September 26, 2017, 02:04:38 AM »
1. yes
2. no  need to be 65 to split pensions...   the big benefit here is usually lower over all taxes instead of the pension credit, however... but maybe you have a lot of non-registered investments?

Both of the above from memory...

Also, you can split CPP pensions, over 65, if you are looking for something to split with pension credit, but only over age 65.

RRIF pension can also be claimed for the pension credit, before age 65, for those who are self-funded., so not discriminatory in CRA's view.  But you need to convert your RRSP to a RRIF first.

Under 65 -- you can use a spousal RRSP to split retirement income.   Yes, this old school RRSP type still has value in an pension-income splitting world, because you need to be 65 to split pensions, normally.

bluebelle

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Re: pension income splitting under age 65 to get pension credit
« Reply #2 on: September 26, 2017, 07:41:07 AM »
thank you for the reply.....
I must have misunderstood the RRIF qualifications before age 65.  If RRIF money qualifies, I'll just convert a small portion of my RRSP money to a RRIF, since I plan to draw it down early to avoid later larger mandatory RRIF withdrawals in excess of our income requirements.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-314-pension-income-amount/you-claim-pension-income-amount-3.html

He'll have his pension, RRIF money, and non-registered funds, I'll have RRIF money and non-registered funds....nice problem to have - deciding which money pot to tap first.   I realize the pension credit isn't huge, but if I can get $300 off my tax bill, it's worth the hassle of creating a RRIF early.