Personal Finance

Take Commuted Value or not

  • Last Updated:
  • Apr 22nd, 2017 4:26 am
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Member
Apr 20, 2011
303 posts
2 upvotes
Scarborough
mcewen wrote:
Apr 12th, 2017 12:05 pm
I believe (not 100% certain), that the $22k part can be transferred to an RRSP whether you have room or not. I don't believe you will get a deduction on it. It was the "non-vested" part of your pension. Essentially you just move it from a sheltered Benefit Plan to your sheltered RRSP.

If you remove it from the shelter (IE, spend it) there will be tax implications.

Not 100%, but 95% sure.
I'm in the same boat.

I understand that there is a portion of the immediate settlement that ca be transferred to a locked-in retirement vehicle (ex. LIRA). However, just to clarify, for the remainder amount that must be take in cash less applicable withholding taxes, can this remainder amount be transferred to a RRSP (if I have contribution room) to avoid taxes?
[OP]
Newbie
Jan 13, 2017
36 posts
10 upvotes
dainfamous41 wrote:
Apr 18th, 2017 9:15 pm
I'm in the same boat.

I understand that there is a portion of the immediate settlement that ca be transferred to a locked-in retirement vehicle (ex. LIRA). However, just to clarify, for the remainder amount that must be take in cash less applicable withholding taxes, can this remainder amount be transferred to a RRSP (if I have contribution room) to avoid taxes?
Yes with HOOPP I had the option of transferring it to an RRSP depending if I had room
Member
Apr 20, 2011
303 posts
2 upvotes
Scarborough
ilostmyid wrote:
Apr 18th, 2017 10:55 pm
Yes with HOOPP I had the option of transferring it to an RRSP depending if I had room
Ok. Is it able to be transferred to the RRSP directly without taxing it?
[OP]
Newbie
Jan 13, 2017
36 posts
10 upvotes
dainfamous41 wrote:
Apr 19th, 2017 9:41 pm
Ok. Is it able to be transferred to the RRSP directly without taxing it?
Yup. If you send them notice is assessment showing there is RRSP room
Jr. Member
User avatar
Nov 3, 2008
155 posts
62 upvotes
National Capital Reg…
Curious here. Did you receive Pension Adjustment Reversal amount? When you participate in DB plan, your RRSP room is reduced by formula for Pension Adjustment. When plan terminates, usually Pension Value is below what was reduced by any PA, with PAR restoring more room for you, on top of your CRA NOA RRSP deduction limit.
Member
Jan 14, 2010
485 posts
83 upvotes
NCR-Manchester wrote:
Apr 20th, 2017 2:44 pm
Curious here. Did you receive Pension Adjustment Reversal amount? When you participate in DB plan, your RRSP room is reduced by formula for Pension Adjustment. When plan terminates, usually Pension Value is below what was reduced by any PA, with PAR restoring more room for you, on top of your CRA NOA RRSP deduction limit.
I didn't. I think my payout value was quite high (had been in pension ++ years)

I really tried to research this, as I was hoping for some additional RSP room. There is a bit of a complicated formula depending on your age, your years until retirement, years in pension, and the proportion of payout vs. LIRA (IIRC?). From what I saw, it is the employer or pension plan who calculates this. Unfortunately, the guide is really written for them. Here's the best I found, with a few examples:
CRA PAR info
Deal Fanatic
User avatar
Apr 29, 2008
5686 posts
1498 upvotes
Montreal
ilostmyid wrote:
Apr 6th, 2017 6:25 pm
I can also transfer to OMERS but I'm planning to start my own business in next 6 months so not sure if I should bother with transferring over or not...
If you don't plan to stay with OMERS, dealing with transfer might not be worth it.

For people reading this thread in another situation, I would consider a transfer if you plan to stay long-term with your new employer, since it will give you years of experience making you eligible for a higher pension at new employer. Example it could give you 3.5 years extra experience in Omers.

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