Author Topic: To commute or not to commute (your pension value)?  (Read 37820 times)

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #50 on: January 07, 2016, 07:12:48 AM »
Joan:  OTPP sent me an email with the final amount of my commuted value and I am happy with it.  I hope you receive a similar email very soon if you haven't received it yet.

So far, I feel so at peace with my decision. 

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #51 on: January 07, 2016, 03:46:02 PM »
And considering that we are taking commuted value when interest rates are low and commuted value is therefore relatively high,  and the current bear market should make buying low relatively easy, I'd say the stars are really lining up for us.  This was my most hoped for scenario.

On a less great note, the school board overpaid me by three days.  Not a huge sum of money certainly.  And thankfully it was only three days. 


BPA

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Re: To commute or not to commute (your pension value)?
« Reply #52 on: January 08, 2016, 08:15:36 PM »
Paper work all done! Now to figure out how to unlock 50% and then the 60 day ticking begins.

Indeed the stars! I figure I only have to beat/meet 3.5% to beat/meet the pension. And the flexibility is what I want. As I walked away from signing the papers, I had a moderate feeling of freedom. It wasn't ecstatic – which I didn't expect, but it wasn't regret. So I think it was the right decision

Three cheers for the stars aligning for us. I agree perfect age for a perfect interest-rate.

Let's keep in touch during the process fashion and then had to decide where to invest it

Sounds good. 

I had a lot of current teacher try to discourage me from taking commuted value because they know this story or that story and have no idea how to invest.  Also, none of them are as frugal as I am.  So, commuting a pension might be a bad idea for them, but it's the right idea for us. 


BPA

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Re: To commute or not to commute (your pension value)?
« Reply #53 on: January 13, 2016, 02:22:24 PM »
Mailed in my Commuted Value application and all the accompanying documentation today.  It should arrive late tomorrow. 

I also finished the paperwork for my BMO brokerage account.

I had to change my investment strategy a bit since my only investments were with Tangerine and they are not on the LIRA list.  Forcing myself to examine other investment options was an education I'm happy about. 

Hope we get our money soon!!!


BPA

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Re: To commute or not to commute (your pension value)?
« Reply #54 on: January 14, 2016, 08:56:23 AM »
I went to the bank again today to sign more papers. I'm using InvestorLine but the back of Montreal branch has been very helpful to help me navigate the process.

I asked today how to initiate the 50% unlocking opportunity as well.it must be requested within 60 days of…? I'm not sure if that's receiving the money or if the initial request from otpp.

Starting to get a little nervous about investing a large chunk of money all at once!

I'm a bit nervous too.  It's a departure from my DCA into Tangerine funds and it is a much larger amount than I'm used to. I'm going to be following the Couch Potato investing idea at Money Sense.  I am going with the Vanguard ETFs (mix of Canadian bonds, Canadian equities, and international equities).  Then I'll rebalance quarterly or biannually. 

If I remember correctly, the unlocking can't happen for me until I'm 50 and transfer it from a LIRA to a LIF. 

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #55 on: January 15, 2016, 09:49:39 PM »
I went to the bank again today to sign more papers. I'm using InvestorLine but the back of Montreal branch has been very helpful to help me navigate the process.

I asked today how to initiate the 50% unlocking opportunity as well.it must be requested within 60 days of…? I'm not sure if that's receiving the money or if the initial request from otpp.

Starting to get a little nervous about investing a large chunk of money all at once!

I'm a bit nervous too.  It's a departure from my DCA into Tangerine funds and it is a much larger amount than I'm used to. I'm going to be following the Couch Potato investing idea at Money Sense.  I am going with the Vanguard ETFs (mix of Canadian bonds, Canadian equities, and international equities).  Then I'll rebalance quarterly or biannually. 

If I remember correctly, the unlocking can't happen for me until I'm 50 and transfer it from a LIRA to a LIF.

There is also a "financial hardship"  rule for early withdrawal of the LIRA in Ontario.   Based on what you say your "projected" income will be - looks like you will qualify.  I plan on using this approach.

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #56 on: January 16, 2016, 05:39:16 AM »
I went to the bank again today to sign more papers. I'm using InvestorLine but the back of Montreal branch has been very helpful to help me navigate the process.

I asked today how to initiate the 50% unlocking opportunity as well.it must be requested within 60 days of…? I'm not sure if that's receiving the money or if the initial request from otpp.

Starting to get a little nervous about investing a large chunk of money all at once!

I'm a bit nervous too.  It's a departure from my DCA into Tangerine funds and it is a much larger amount than I'm used to. I'm going to be following the Couch Potato investing idea at Money Sense.  I am going with the Vanguard ETFs (mix of Canadian bonds, Canadian equities, and international equities).  Then I'll rebalance quarterly or biannually. 

If I remember correctly, the unlocking can't happen for me until I'm 50 and transfer it from a LIRA to a LIF.

There is also a "financial hardship"  rule for early withdrawal of the LIRA in Ontario.   Based on what you say your "projected" income will be - looks like you will qualify.  I plan on using this approach.

When I saw that "financial hardship" meant an income of less than over $30k, I was rather amused.  I'm going to use that approach too.  Great minds think alike.  :)  Do you know if the early withdrawal for "financial hardship" includes the LIRA or is it only the LIF/LRIF?  I'm sure I won't need to access any of that money until I'm over 50, so I was focusing on the LIF early withdrawal, but I like the flexibility of being able to take out funds from the LIRA early if necessary.

Thanks, TC. 

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #57 on: January 16, 2016, 10:25:07 AM »
I went to the bank again today to sign more papers. I'm using InvestorLine but the back of Montreal branch has been very helpful to help me navigate the process.

I asked today how to initiate the 50% unlocking opportunity as well.it must be requested within 60 days of…? I'm not sure if that's receiving the money or if the initial request from otpp.

Starting to get a little nervous about investing a large chunk of money all at once!

I'm a bit nervous too.  It's a departure from my DCA into Tangerine funds and it is a much larger amount than I'm used to. I'm going to be following the Couch Potato investing idea at Money Sense.  I am going with the Vanguard ETFs (mix of Canadian bonds, Canadian equities, and international equities).  Then I'll rebalance quarterly or biannually. 

If I remember correctly, the unlocking can't happen for me until I'm 50 and transfer it from a LIRA to a LIF.

There is also a "financial hardship"  rule for early withdrawal of the LIRA in Ontario.   Based on what you say your "projected" income will be - looks like you will qualify.  I plan on using this approach.

When I saw that "financial hardship" meant an income of less than over $30k, I was rather amused.  I'm going to use that approach too.  Great minds think alike.  :)  Do you know if the early withdrawal for "financial hardship" includes the LIRA or is it only the LIF/LRIF?  I'm sure I won't need to access any of that money until I'm over 50, so I was focusing on the LIF early withdrawal, but I like the flexibility of being able to take out funds from the LIRA early if necessary.

Thanks, TC.


Either or - here is a link with more information.  I have a friend who is a CFP - he has advised many clients to use the rule, with much success.
https://www.fsco.gov.on.ca/en/pensions/financial_hardship/Pages/Financial_Hardship_2012_Budget.aspx

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #58 on: January 17, 2016, 05:30:18 AM »
Either or - here is a link with more information.  I have a friend who is a CFP - he has advised many clients to use the rule, with much success.
https://www.fsco.gov.on.ca/en/pensions/financial_hardship/Pages/Financial_Hardship_2012_Budget.aspx

Thanks!  I hadn't seriously considered it until after age 50, but that is good to know.  :)  Yay for us!

I sure love this RE thing. 

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #59 on: February 12, 2016, 01:13:38 PM »
With the markets being what they are, I've had several people on a spectrum of "I told you so" to concern about my decision to commute my pension.  Thing is that I haven't received the money yet, so I'm pretty golden right now.

Gah!  I don't want to point out to them that just because they took a pension doesn't mean they are safe.  We've already seen plan amendments because of low returns for the OTPP.

Thanks for listening to my vent.

Al1961

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Re: To commute or not to commute (your pension value)?
« Reply #60 on: February 18, 2016, 08:35:11 PM »
Feels good, eh?

congrats

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #61 on: February 19, 2016, 06:14:42 PM »
But still nervous about investing a big chunk all at one time....😁

If you put your money in one investment category - I would be nervous too.  You could try a well diversified strategy of:

 40% Bonds 20% US, 20% Int, 20% Can. 

Then rebalance once a year.  Also, if the investments go down in the short term - so what?  You are still collecting dividends.
Since you are from Toronto - check this out:  http://canadiancouchpotato.com
« Last Edit: February 19, 2016, 06:30:25 PM by thriftycanadian »

Al1961

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Re: To commute or not to commute (your pension value)?
« Reply #62 on: February 19, 2016, 10:53:47 PM »
But still nervous about investing a big chunk all at one time....😁

If you put your money in one investment category - I would be nervous too.  You could try a well diversified strategy of:

 40% Bonds 20% US, 20% Int, 20% Can. 

Then rebalance once a year.  Also, if the investments go down in the short term - so what?  You are still collecting dividends.
Since you are from Toronto - check this out:  http://canadiancouchpotato.com

I understand the nervous feeling.

That was my AA for the funds from my lump sum.

Goldielocks

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Re: To commute or not to commute (your pension value)?
« Reply #63 on: February 20, 2016, 09:09:42 AM »
Amazing thread!

I have to add another example of pension plans not being secured -- Crown Corporations...
These formerly Government-run organizations originally did not need to put the pension plans into trust when they privatized.   (Pensions continued to be financed from current revenues, like the governments that BPA links to).

But, a crown corporation can go bankrupt, and pretty easily.

This is what (almost) happened at Air Canada in 2003 when they filed for bankruptcy.

Canada's national airline originated from the Canadian federal government's 1936 creation of Trans-Canada Airlines (TCA), and was privatized in 1988


My relative, in 2003, who had been retired for all of 2 years, receiving a company pension, received a warning letter that his pension monthly amount would drop to only 30% its current value. as a result of the bankruptcy filing.  Thank goodness that never realized when they emerged from restructuring, but it could have.  It really could have.  And the company would have done it just to improve finances if allowed.   

He worked for the airline for 37 years, since the 1960's, and even with the privatization, always assumed it would continue to be backed by the government at the end if needed  (because 75% of his working years was actually for the government before privatization!).   Yes, his pension was a generous one, but a sudden massive loss of your income, forever, is crushing news.   I would not be surprised to see more government pension announcements like the Detroit one BPA posted, or  for "top hat" pension benefits cut.   

The key is to check if the pension money is fully funded and put into a "trust" account, rather than general revenue.  Today, more pensions (government too) are putting new pension $'s into trust, but some still have not funded the decades of prior commitments.


BPA

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Re: To commute or not to commute (your pension value)?
« Reply #64 on: February 20, 2016, 11:49:57 AM »
Just got my $$$$!

I'd say perfect time to get it, now to invest while markets are down. Since the cv was so high, only have to make 4% to beat the pension. Can do that just with dividends on RBC stock :-)

Okay, I know it's not so simple... But I'm feeling good so far about it.

Congrats!  Mine is still two weeks away thanks to a colossal fuck up at the BMO branch I dealt with.  OTPP was great and when dude tried to turn around and blame them for his incompetence, I was pretty annoyed. Luckily, the people at BMO Investorline knew what they were doing even if this dude and his manager were clued out and unprofessional. 


BPA

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Re: To commute or not to commute (your pension value)?
« Reply #65 on: February 20, 2016, 01:12:59 PM »
Amazing thread!

I have to add another example of pension plans not being secured -- Crown Corporations...
These formerly Government-run organizations originally did not need to put the pension plans into trust when they privatized.   (Pensions continued to be financed from current revenues, like the governments that BPA links to).

But, a crown corporation can go bankrupt, and pretty easily.

This is what (almost) happened at Air Canada in 2003 when they filed for bankruptcy.

Canada's national airline originated from the Canadian federal government's 1936 creation of Trans-Canada Airlines (TCA), and was privatized in 1988


My relative, in 2003, who had been retired for all of 2 years, receiving a company pension, received a warning letter that his pension monthly amount would drop to only 30% its current value. as a result of the bankruptcy filing.  Thank goodness that never realized when they emerged from restructuring, but it could have.  It really could have.  And the company would have done it just to improve finances if allowed.   

He worked for the airline for 37 years, since the 1960's, and even with the privatization, always assumed it would continue to be backed by the government at the end if needed  (because 75% of his working years was actually for the government before privatization!).   Yes, his pension was a generous one, but a sudden massive loss of your income, forever, is crushing news.   I would not be surprised to see more government pension announcements like the Detroit one BPA posted, or  for "top hat" pension benefits cut.   

The key is to check if the pension money is fully funded and put into a "trust" account, rather than general revenue.  Today, more pensions (government too) are putting new pension $'s into trust, but some still have not funded the decades of prior commitments.
. Ohhhh! Thanks for sharing this!

Yes!  Thanks!  I feel sure I've made the right decision even if a lot of other teachers think I'm insane.  :)


grrrr!!!! But once you receive, good time to invest.

Today: Used the after tax money to top up RRSPS, TFSAS, Repay OHOSP. Feels good to be  maxed out!


Agreed.  Our timing seems perfect, Joan.  :)

I'll be paying a ton off the mortgage with the non-locked in amount and then putting most of the rest in TFSAs.  I wish I had more RRSP room.

powersuitrecall

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Re: To commute or not to commute (your pension value)?
« Reply #66 on: February 20, 2016, 02:42:33 PM »
I'll be paying a ton off the mortgage with the non-locked in amount and then putting most of the rest in TFSAs.  I wish I had more RRSP room.

It's been great reading this thread - I will have to make a similar decision about 4 years from now. 

To start preparing for the potentially large taxable amount, I've been letting my RRSP room grow (about $4-5K per year).  I also plan on retiring near the end of one calendar year and receiving my lump sum in the next, which should help on taxes as well.  This is allowed, correct?

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #67 on: February 21, 2016, 02:16:12 AM »
But still nervous about investing a big chunk all at one time....😁

If you put your money in one investment category - I would be nervous too.  You could try a well diversified strategy of:

 40% Bonds 20% US, 20% Int, 20% Can. 

Then rebalance once a year.  Also, if the investments go down in the short term - so what?  You are still collecting dividends.
Since you are from Toronto - check this out:  http://canadiancouchpotato.com

I've never owned bonds. I know I'm "supposed" to... What would the potential earnings be now?
Made 10% the past three years on the nest egg. . I'd be happy to stick with that strategy, but it includes no bonds.

I need to learn more about bonds I suppose..


Bonds (Bond Indexes) help reduce portfolio volatility.  Also provide money to rebalance with when stocks are down, allowing you to buy stocks on sale.  A bond index ETF like VAB will get you about 2.5% return and will hold firm while stocks slip.  Congrats on the 10% return the last three years, however, past returns does not mean that will continue on - especially in the midst of a correction.


thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #68 on: February 21, 2016, 07:10:52 PM »
But still nervous about investing a big chunk all at one time....😁

If you put your money in one investment category - I would be nervous too.  You could try a well diversified strategy of:

 40% Bonds 20% US, 20% Int, 20% Can. 

Then rebalance once a year.  Also, if the investments go down in the short term - so what?  You are still collecting dividends.
Since you are from Toronto - check this out:  http://canadiancouchpotato.com

I've never owned bonds. I know I'm "supposed" to... What would the potential earnings be now?
Made 10% the past three years on the nest egg. . I'd be happy to stick with that strategy, but it includes no bonds.

I need to learn more about bonds I suppose..


Bonds (Bond Indexes) help reduce portfolio volatility.  Also provide money to rebalance with when stocks are down, allowing you to buy stocks on sale.  A bond index ETF like VAB will get you about 2.5% return and will hold firm while stocks slip.  Congrats on the 10% return the last three years, however, past returns does not mean that will continue on - especially in the midst of a correction.

Thank you for your thoughtful reply. Would you mind explaining why would I buy bonds at 2.5% which hardly keeps pace with inflation, when I can get 4 - 4.5% dividends. I must be missing something?

Risk and rebalancing ability.  Dividend paying stocks have significantly more downside risk than an aggregate bond index.  Everyones tolerance for risk is different.  If you can stomach an all stock portfolio and potentially seeing your assets cut in half during a correction - more power to you.
I have 40% bonds to (1) sleep well at night  (2) Use them to rebalance when stocks are on sale.


« Last Edit: February 21, 2016, 07:13:50 PM by thriftycanadian »

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #69 on: February 21, 2016, 07:37:49 PM »
I see! My logic (?) is that CPP, OAS, my second more lucrative pension, real estate is my more stable part of the portfolio and the RRSP, TFSA to be the more aggressive part. Well, it's all unknown...only time will tell :-)

I see why you would go more stock since you have other income sources/assets to draw from and/or balance risk - makes perfect sense.

Your earlier comment about being a bit concerned about jumping into the market all at once is what prompted my reply with the AA idea - which helps overcome that. 

Cheers,

TC
« Last Edit: February 21, 2016, 07:42:19 PM by thriftycanadian »

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #70 on: February 25, 2016, 05:45:04 PM »
Thrifty Canadian, i've been poring over websites tonight looking at all the ETFs for bonds, Canadian equities, US equities, global equities, and outside North America. There's TOO much to choosefrom. (i'm really not sure how to make the decision of which bond ETF I would choose) The VAB came out at 2.78% for the last 12 months. Which is probably a good thing for me to look at. Because I think I only need to reach 3 1/2% or so to beat what the pension would have paid me, and I'm not so interested in beating the pension as being able to have access to the capital if I need it, and mostly to have the flexibility of withdrawing when I want. I think you have convinced me! The only time before this that I have bonds was a claymore 5 yr laddered bond, which wasn't the best.

Did you see the article on the daily reckoning site which discussed ETFs as a time bomb in plain sight? David stockman. I started another thread but if anyone here has insight into this, that might be good.

This is such a hard game.

VAB is a good all round choice.  I hold that in my portfolio. 

Re: David Stockman, Take him with a grain of salt. He is a doomsday guy, thinks the worst correction of all time is going to happen any day now.   Mainstream ETF's like Vanguards, BMO's and ISHARES are safe.  If you are concerned, I suggest you could invest in TD E Series Index Bond/Stock funds instead.  Unless you are a professional institutional investor, I would forget about holding individual stocks and invest in indexes instead.

If you think guys like David Stockman hold some truth, then hold something along the lines of 30% VAB, 20% GOLD and 50% stock indexes (US,CAN, INT) and you can sleep better at night.  He thinks GOLD will go up, as with most doomdayers.  I have ZERO Gold in my portfolio.

In my opinion, there are better sources of information than Stockman and they are:

Jack Bogle (founder of Vanguard)  - His videos are all over youtube.
Andrew Hallam - Canadian Author and an excellent resource   http://andrewhallam.com
Canadian Couch Potato: canadiancouchpotato.com/

Thrifty

« Last Edit: February 25, 2016, 06:00:12 PM by thriftycanadian »

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #71 on: February 25, 2016, 05:50:25 PM »

http://www.thestar.com/business/personal_finance/2010/10/08/six_reasons_why_i_wont_buy_bonds.html

Ahh...the seesaw begins....a man with a pension sees as i was thinking.

He mentions Individual Canada Savings Bond in a taxed environment - a little different than what we are talking about here in terms of context.

VAB is different in the sense that is has an aggregate holding of various types of long, mid, short government and corporate bonds and can be traded at ANY time within a tax shelter environment.

Again, VAB or VSB is for: 
(1) Risk mitigation while keeping with inflation (at least)
(2) Allows you to rebalance when stock indexes have dropped




« Last Edit: February 25, 2016, 05:54:51 PM by thriftycanadian »

Cookie78

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Re: To commute or not to commute (your pension value)?
« Reply #72 on: February 25, 2016, 09:15:25 PM »
Thx for the insights! I don't know Andrew Hallam. Will check out!

I really enjoyed his book also.


I did mine last January. That is, submitted the paperwork on Jan 5. Tool about three weeks to receive the cash - less 30% withholding tax on the amount in excess of what I could roll into a LIRA. No RRSP room. Had the joy of making a $20,000 installment payment on Dec 15 since the withholding tax was insufficient.

Don't forget to do a dry run on your 2016 taxes so you can determine how much your installment payment, if any, should be. Penalties and interest on un-remitted installments can get expensive.

Al

In general, how do you know if you need to make an installment payment?!

Al1961

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Re: To commute or not to commute (your pension value)?
« Reply #73 on: February 26, 2016, 12:03:36 PM »
Al
Ack! You are right! I owe 50% tax on the taxable amount. They only took off 30%. I'm going to owe another 30,000 or so. The planning begins...

Surely that's your marginal rate, not your average rate! In Alberta, my dry run on 2015 taxes showed an average tax rate of 33%, whereas the top marginal rate was effectively 40.25% (44% for 2016).

For info about installment payments, see: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/wh-eng.html (lots of links to follow to get the full story!)

Essentially, if you will owe >$3k for 2016 (this is a given) AND you owed >$3k in either 2014 OR 2015, you will be required to make an installment payment, no later than December 15, 2016, of the amount required to reduce your liability ON FILING to <$3k. Failure to do so results in interest, backdated to the date you SHOULD have paid, calculated at 5%, compounded daily.

Penalties may also accrue. The penalty is the higher of:
    $1,000
    or
    25% of the installment interest that you would have had to pay if you had not made installment payments for 2016. (There is an ugly calculation there that I won't reproduce here (see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/ntrst-eng.html )

So you need to look at your situation. In addition to your employment income, did you have self employment income and/or investment income over ~$10k in 2015? that will probably cause a 2015 liability of >$3k that will require you to make an installment in 2016.

If you did not have a >$3k amount owing in either of the past two years, you do not have to make an installment payment in 2016, and can just pay the total amount owing when you file in 2017. That may trigger the need to make installment payments in 2017 or 2018.

Clear as mud, isn't it?

Al

edited to clean up quotes and remove some personal info.
« Last Edit: February 26, 2016, 12:06:29 PM by Al1961 »

Cookie78

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Re: To commute or not to commute (your pension value)?
« Reply #74 on: February 26, 2016, 01:16:13 PM »
Al
Ack! You are right! I owe 50% tax on the taxable amount. They only took off 30%. I'm going to owe another 30,000 or so. The planning begins...

Surely that's your marginal rate, not your average rate! In Alberta, my dry run on 2015 taxes showed an average tax rate of 33%, whereas the top marginal rate was effectively 40.25% (44% for 2016).

For info about installment payments, see: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/wh-eng.html (lots of links to follow to get the full story!)

Essentially, if you will owe >$3k for 2016 (this is a given) AND you owed >$3k in either 2014 OR 2015, you will be required to make an installment payment, no later than December 15, 2016, of the amount required to reduce your liability ON FILING to <$3k. Failure to do so results in interest, backdated to the date you SHOULD have paid, calculated at 5%, compounded daily.

Penalties may also accrue. The penalty is the higher of:
    $1,000
    or
    25% of the installment interest that you would have had to pay if you had not made installment payments for 2016. (There is an ugly calculation there that I won't reproduce here (see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/ntrst-eng.html )

So you need to look at your situation. In addition to your employment income, did you have self employment income and/or investment income over ~$10k in 2015? that will probably cause a 2015 liability of >$3k that will require you to make an installment in 2016.

If you did not have a >$3k amount owing in either of the past two years, you do not have to make an installment payment in 2016, and can just pay the total amount owing when you file in 2017. That may trigger the need to make installment payments in 2017 or 2018.

Clear as mud, isn't it?

Al

edited to clean up quotes and remove some personal info.

Awesome! Thanks for the info. I'll remember to keep that in mind after the first year I ever owe >$3k.

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #75 on: March 05, 2016, 08:43:31 AM »
Great information, Al!  Thanks!  And thanks to TC too and all of the other contributors.

Joan:  I am very grateful to you for starting this thread.  It has been informative and has also been something I've read for those moments when I was feeling uncertain about my ability to manage my own money.  Certainly most teachers I know thought I was insane and couldn't do it on my own.  There are risks, but I'm feeling more confident and we chose a really good time to take commuted value.  Also, as Al pointed out a while ago, plan amendment risk is real and people tend not to take it into account.

Finally got my money, and have couch potatoed it.  :D

BPA

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Re: To commute or not to commute (your pension value)?
« Reply #76 on: March 05, 2016, 11:41:16 AM »
Hey Joan!

This is what I've followed.  I subscribed to Money Sense online for $20/year and plan to consider what else I hear from the Couch Potato people there.

http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdf


thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #77 on: March 05, 2016, 05:56:06 PM »
Great information, Al!  Thanks!  And thanks to TC too and all of the other contributors.


Finally got my money, and have couch potatoed it.  :D

Congrats!


Al1961

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Re: To commute or not to commute (your pension value)?
« Reply #78 on: March 13, 2016, 11:04:17 PM »

Al, I am afraid that this includes me. how would I be supposed to know this,  if you hadn't been so kind to point this out? Is the rule that you can't go over $3000 years in a row?

Just saw this. Yeah, the government wants its pound of flesh earlier if you have income sources for which tax is not withheld at source. Hence the rules about installments.

If you owe more than $3k upon filing for 2015, CRA will most likely send you an "installment reminder" sometime during 2016 to make an installment payment. The info on the reminder will be based on your 2015 tax situation.

This "reminder" will not show the appropriate amount to pay for your 2016 lump sum. You get to calculate that yourself. Don't forget to include the new 33% federal bracket. Fortunately, there are a number of on-line calculators that you can use.

Al

thriftyc

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Re: To commute or not to commute (your pension value)?
« Reply #79 on: March 19, 2016, 08:01:17 PM »
I haven't received anything yet!

Saga update:

I took the forms to the bank to do the 50% unlocking within 60 days.

The advisor said: now is not the time for this, the time for unlocking is 60 days from moving the money from a lira to a lif. So if I have this straight:

I will not need to draw upon this money soon, so I keep it as a LIRA. When I need to start withdrawing,  I convert the LIRA to a LIF (much like converting a RRSP to a RIFF, maybe). and it is then, I apply for the 50% unlocking.

But then after this clarification, the banker said, but you'd better check that out. So I called directly to CRA and the Ontario Financial commission and the people that I spoke to DIDNT know what I was talking about, this 50% unlocking! Arg!!!  Really?

How to find out?

Here is a straight forward explanation on various ways to unlock LIRA's in Ontario:
http://www.moneysmartsblog.com/how-to-unlock-an-ontario-locked-in-retirement-account-lira-lrif/