by admin on April 2, 2012
Cashable annuities add liquidity to your annuity options
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Cashable annuity
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Registration type
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Non-registered only
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Features/options
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Tax treatment options
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Accrual only
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Variability of income
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None (if cashable feature is not used)
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Income sustainability
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Life or term (if cashable feature is not used)
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Liquidity
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Yes (income payments will be reduced within the guarantee period)
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Indexation
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Available
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Note the cashable feature is not available with prescribed tax treatment as tax rules do not
permit it.
The cashable feature is applicable for single life, joint life, term and life annuities except in the following cases.
- Prescribed treatment
- Registered annuities
- Impaired annuities
Benefits to clients
Many clients need help to prepare for the shift from accumulation to the preservation and generation of income in retirement.
For some clients, annuities can provide a simple solution that guarantees future income sustainability. However, in the event of unexpected expense or the need for a lump sum of cash, annuities haven’t traditionally been able to provide liquidity.
The cashable annuity increases the choices and features available to meet clients’ needs. London Life continues to offer a rich selection of annuity choices1: single life, joint life, and term certain with:
- Cashable (new)
- Deferred income up to 10 years
- Impaired
- Indexing
- Return of premium (with or without interest)
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by admin on November 20, 2010
This concept should be used when you do not have the cash flow to fully fund both your annual registered retirement savings plan (RRSP) and tax-free savings account (TFSA) contribution room. It will help you decide which type of investment you should contribute to first: an RRSP or a TFSA. The better choice depends on your needs, as well as your current and future tax rates.
Generally, if your are likely to be in a lower tax bracket after retirement, contributing to an RRSP first is still the right option. However, if you will be in a higher tax bracket after retirement, you should maximize TFSA contributions first. In reality, when income allows, most people will eventually want to consider contributing to both to attain their long-term retirement goals.
Contributing to a TFSA provides you with a flexible way to earn investment income (including capitals gains) tax-free. Any unused contribution room is also carried forward to future years, which means your tax-saving potential grows annually. Plus, if you need to make a withdrawal, it’s tax-free and you gain back that contribution room, unlike those from an RRSP.
If you expect to earn more income in the future, it may be a good strategy to contribute to a TFSA now, when they’re paying less tax, and contribute to an RRSP later when you will be subject to a higher tax rate and your RRSP contribution will generate more tax savings.
Lastly – just because it is called a Tax Free SAVING ACCOUNT does not mean it cannot be an investment account. Talk to your advisor or myself which type of investments make the most sense in your TFSA.
Michael Scott, B.Sc., CFP, Principal
905 315-9060
| Toll Free: 1-888-251-0640 Ext 12
Email: info@financialplannerburlington.com
Michael Scott is a principal in the Millcroft Financial Group
located in Burlington which provide financial services to
the Family and Business market.
Michael is supported by "The Wealth Estate Planning Group"
of London Life and provides financial and succession planning
with the goal of providing family harmony and legacy.
Download his FREE SPECIAL REPORT
That Reveals "7 Questions You Must Ask
Before Choosing A Financial Planner"
here==> www.FinancialPlannerBurlington.com
