Pension payout, withholding tax and flow funds
After a separation from his employer, they are offering him a pension payout.
Given the Canadian law, he was told that $300k must go to a lira account. Remainder, another $300k will be paid out after a 35% withholding tax. Additionally the remainder 65% will be counted towards his current annual income and will be subjected to his income tax bracket fees at the end of year.
What is the best approach to avoid loosing >50% of the funds which can not be in the lira?
He was told there might be a “flow fund” option. After reading I think it’s very risky.
Any thoughts would be appreciated.