Originally Posted by
skandalouz_08
If you need some help shoot me a PM. I work with this kind of stuff all the time and can give you some guidance.
LIRA and Locked in RSP are basically the same thing but have a different name depending on the province that you're in or if it's federally regulated versus provincial. The basic rules around them are the same. Restrictions around withdrawal until you are 50 or 55, taxable upon withdrawal and certain restrictions that only allow you to take out a certain % each year.
Pension plans differ by company where some companies are able to contribute more into the plan than others. This affects the pension adjustment amount and in come cases companies can end up going over this amount. Based on available contribution room of the OP, the government has calculated that there was that much over contributed based on years of service/working and the $28K has to be taken out and taxed. It doesn't happen in ever circumstance but happens from time to time depending on the company.
Exactly. The commuted value is based on a number of factors. OP's age, interest rates etc.
Once that is determined, they come up with the "Allowable Amount transfer to a LIRA" which is a standard formula.
LAPP is a Defined Benefit Plan, so, the way they would calculate it is as follows:
(I'm assuming OP is under 50)
Annual Retirement Benefit x Present Value Factor (This is set by the government, if you are under 50 this is "9").
So, based on the information above, I'm assuming OP had accumulated an annual retirement benefit based on years of service x salary etc of $6,550.
Using the formula:
$6,550 (Annual Retirement Benefit) x 9 (Present Value Factor) = $59,000
If your commuted value is above the $59,000, any excess amount is taxable as income, unless you defer it to an RRSP.
Furthermore, I would assume OP was working with their employer for about 5 years (give or take a year haha)
Last edited by dezmarez; 02-11-2020 at 05:14 PM.
These opinions are entirely my own and do not represent any other person or organization.