How do I make the most off a lump sum payment from work?
Looking for some advice from you finance experts.
Through some stuff going at on work, I will be getting a fair sized lump sum payment. I have 3 options:
1) Take it all now and have it taxed accordingly
2) Take it tax free by contributing it to RRSP
3) Combo of the above (% split according to my wish)
My first instinct was to go option 2 and contribute all of it into spousal RRSP, however, upon some more research, it doesn't seem as good of an idea. i) Can't touch it for 3 years ii) Wife's tax bracket is only marginally less. The only way this would seem to work is if she is not working some time after 2015, and then we would still take a bit of cut due to reduced spousal credit.
So now I'm looking at just going option 1 and taking the money now since option 2 wouldn't actually save us very much. While we don't "need" the money right now, we could certainly make use of it now or in a time frame very close to now.
Do I have any alternatives that I haven't looked at yet? I want to have this lump sum taxed as little as possible or used as effectively as possible in an immediate/soon time frame, but it looks like either way it works out to being roughly the same. Is this the case?
TIA.
Through some stuff going at on work, I will be getting a fair sized lump sum payment. I have 3 options:
1) Take it all now and have it taxed accordingly
2) Take it tax free by contributing it to RRSP
3) Combo of the above (% split according to my wish)
My first instinct was to go option 2 and contribute all of it into spousal RRSP, however, upon some more research, it doesn't seem as good of an idea. i) Can't touch it for 3 years ii) Wife's tax bracket is only marginally less. The only way this would seem to work is if she is not working some time after 2015, and then we would still take a bit of cut due to reduced spousal credit.
So now I'm looking at just going option 1 and taking the money now since option 2 wouldn't actually save us very much. While we don't "need" the money right now, we could certainly make use of it now or in a time frame very close to now.
Do I have any alternatives that I haven't looked at yet? I want to have this lump sum taxed as little as possible or used as effectively as possible in an immediate/soon time frame, but it looks like either way it works out to being roughly the same. Is this the case?
TIA.
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