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amit tax plannign advice create tax efficiencies explain the advantages and disdavantages aged 55 earns $150,000 maximum $27,000.00 which is below the current threshold retire 65 RRSPs $ 600,000.00...

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amit
    tax plannign advice
    create tax efficiencies
    explain the advantages and disdavantages
    aged    55        earns    $150,000        maximum        $27,000.00    which is below the cu
ent threshold
    retire    65
    RRSPs    $ 600,000.00        5%    through to retirement                TFSA    $ 70,000.00    cu
ent
                4%    iin retirement                    $7,500    annual investment
                    returns paid on year end balances
    contributes a further         $ 10,000.00    for next ten years
    maximize TFSA or RRSP ? Why ?
    we treat inflation as non existent
    OK so the question in front of us is merely a tax issue
    what will the cu
ent amount be worth at age 65, based on his plans to invest 10000 into the RRSP
    then, can each be eligible for OAS and CPP
    so lets work proceedurally
    what is the value?
    lets calculate it
    pv    $ 600,000.00
    pmt    $ 10,000.00
    n    10
    i    5
    cy and py    both 1
    generates an fv of        $ 1,103,115.70
    that is at age 65        investing 10000 per yea
    does he have to take out any savings yet ? He does not have to- now the case says he will withdraw 2500 which is XXXXXXXXXXannually
    remember this is all he has !!!!
    IF he invests the full $27000
    pv    $ 600,000.00
    pmt    $ 27,000.00
    n    10
    i    5
    cy and py    both 1
    generates an fv of        $ 1,316,939.88
    that is at age 65            roughly XXXXXXXXXXdifference
paula
    tax plannign advice
    create tax efficiencies
    explain the advantages and disdavantages
    aged    55        earns    $150,000        maximum        $27,000.00    which is below the cu
ent threshold
    retire    65
    RRSPs    $ 700,000.00        6%    through to retirement                TFSA    $ 70,000.00    cu
ent
                5%    iin retirement                    $ 7,500.00    annual investment
                    returns paid on year end balances
    contributes a further         $ 10,000.00    for next ten years
    so she will have
    what is the value?
    lets calculate it                IF she invest the full 27000
    pv    $ 700,000.00            700000
    pmt    $ 10,000.00            27000
    n    10            10
    i    6            6
    the fv is     $ 1,385,401.33            $ 1,609,474.85
    this is by investing        $ 10,000.00    per year    $ 27,000.00    per yea
Sheet1
    the issue is whether to invest the RRSP maximum or the minimum
    they will invest 10000 no matter what into their
sps
    Is it better to keep maximum funding the
sp or should they divest their investments
    well, at 72 what do they have to do? They have to withdraw money from the
if
    THEY DONT have to do anything with the TFSA OR the non registered money
    the vacations are best funded though the TFSAs, since there isnt any tax on withdrawals
    they could be eligible for GIS provided they do not withdraw money from their RRSPs between age 65 and 71
    why? Provisions of GIS
        your income is below $19250
        your income plus spouse is below 25440
    they are both eligibel for full OAS
        why? Because the clawback begins at what income level and is fully clawed back at what level?
    Now, go search for the minimum RRIF withdrawal rates
        what is it at         72
                73
                74
                75
                76
                77

CFP 103 Assignment 3
Written assessment designed to evaluate communication skills.
Worth 10% of your final grade.
Delivery details:
Deliverable no later than 5:00 PM EST 26 November 2021
Email to XXXXXXXXXX
Your assignment must be completed and sent in a Word file (I will decline pdfs, jpegs and other files). I will not download files from the ‘cloud.’ You ay also provide supporting documentation with EXCEL if you wish.
Your document must be written in size 12 Arial font and the file name must be formatted as:
Last name_first name_cfp103_assignment 3
The purpose of this assignment:
It is designed to help you learn how to communicate clearly through written language. You are tasked with developing a financial plan for hypothetical clients. Fair warning: I would not leave this assignment until the last minute, and/or do the very least amount of effort possible because that will annoy me.
Follow the guidance I provide below on how to build your case.
Requirements:
1) Appropriate cove
title page
2) Review of the facts (name the clients, their goals and objectives, and the purpose of your report)
3) Create a financial analysis of their situation: how is their money allocated cu
ently? Is this advantageous?
4) How should they draw down their investments in the most tax efficient way ?
5) You will then make a recommendation to the prospective clients. This recommendation should be logical and reasonable, employing facts to substantiate your position. Specifically you will tell them what to do and when they should do it. You will fail this case study if you do not do this step.
6) At all times keep written language appropriate and professional.
Helpful notes:
The importance here is to teach you to make convincingly strong arguments in a professional environment. You should complete the case well before the deliverable date and ask someone to review your work. Get a critical analysis of your work and see how you can improve it. It is recommended that non-native English speakers/writers particularly check their work, noting that in Canada we follow British spelling practices.
CFP 103 Assignment 3
You are asked to provide tax planning assistance to the following couple. Specifically, given the financial information below, you are asked to design tax efficiencies for them during the payout stage of their financial plan.
Remember, what I am looking for is why you make the recommendations you select. I want you to explain the advantages and disadvantages associated to your recommendations, followed by ideas on how to mitigate (offset) any disadvantages, and then suggest an implementation plan.
I am less concerned about the math than I am with the reasons you create. That is not to say the math is immaterial, but rather that my interest is in your decision making ability and communication strength.
You are welcome to offer an excel document to supplement/substantiate any recommendations.
Details
Amit and Paula are both aged 55. They plan to retire when Amit turns 65. They want you to devise a tax efficient payout plan, allowing them to draw down on their investments over time.
Base your plan on the following information:
Amit has $ XXXXXXXXXXin RRSPs which are growing at an average 5% through to retirement. Once in retirement Amit’s RRSP/RRIF generates a 4% return annually. Returns are paid on fund balances at the end of any given year.
Paula has $ XXXXXXXXXXin RRSPs which are growing at an average 6% through to retirement. Once in retirement her RRSP/RRIF generates a 4.5% return annually. Returns are paid on fund balances at the end of any given year.
They intend to contribute $10 000 to each RRSP for the next 10 years. That is, they intend to contribute a total of $20 000 to RRSPs each year.
They each have fully maximized TFSAs, and intend to fully maximize their TFSAs for the next 10 years. Treat the cu
ent TFSA contribution limit at $ XXXXXXXXXXand escalating by $7 500 each year thereafter. (This is for simplicity).
They both earn $ XXXXXXXXXXper year, and neither has any pension beyond their RRSPs. Determine if it is more advantageous to contribute to their RRSPs or to the TFSAs- which should be the priority. Treat their annual incomes as constant through until retirement (no inflation effect).
They both jointly own $ XXXXXXXXXXin non registered assets cu
ently earning 4% in dividends annually, and in capital value by 5% annually. REMEMBER: dividends are paid on the initial investment, not on any capital growth. The ACB on these investments is $100 000.
They will convert their RRSP into a RRIF when required to do so by law.
Make sure you consider options such as
· Income splitting
· The pension income tax credit
· Payouts occur at the beginning of the month
· Amit will get $700 of CPP monthly at age 65, and Paula will get $800 of CPP.
· Determine if they would be eligible for OAS and/or GIS. If so, then OAS pays $600 monthly and GIS pays $700 monthly.
· Each spouse will draw down $2 500 from his/her RRSP/RRIF monthly once in retirement. For purposes of this study we will treat this drawdown equivalent to the required RRIF drawdown
· They wish to cele
ate their first year in retirement with a vacation estimated to cost $ XXXXXXXXXXThis occurs at the end of the year they turn 66.
· They will cele
ate again at the end of the year they turn 71 with another vacation costing $ XXXXXXXXXXThey will take another vacation at age 76 costing $10 000 as well. Determine the most tax effective way to draw these cash requirements from their investments.
· Let us assume any money coming in is spent or used in some way: it is not saved.
This assignment would likely be done best on excel, since you need to plan the growth of their funds initially. You will also need to determine other income streams such as CPP, OAS and GIS.
Remember, the numbers are important but so too is your judgement and use of information covered in the course.
Good luck
Answered 3 days After Nov 29, 2021

Solution

Neha answered on Dec 02 2021
118 Votes
Sheet1
accumulation math
    the first thing is to set up the spreadsheet and see what we get in terms of their incomes, because we need to calculate the discretionary and non discretionary spending
    we also need this to determine their annual savings, and establish a rate of return NOTE we will use numbers drawn from a source of information
    So what does that mean? Well, use something with a proof behind it- a justification
    Out of there annal income, they are ale to contibute an amunt towards their spending and saving. By finding out the amont they contribute annually to the sving, we can establish the amount hey will require and the rate at which they are able to generate return of their income.
        spouse 1    spouse 2    spouse 1    spouse 2    spouse 1    spouse 2    total annual    savings    total    5% return    end of yea
    year    age     age    income    income    contribution    contribution    contribution    (prev year)    savings    on savings    total savings
    1    32    30    $ 60,000.00    $ 80,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    0    $ 61,000.00    $ 3,050.00    $ 64,050.00
    2    33    31    $ 60,000.00    $ 80,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 64,050.00    $ 125,050.00    $ 6,252.50    $ 131,302.50
    3    34    32    $ 60,000.00    $ 80,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 131,302.50    $ 192,302.50    $ 9,615.13    $ 201,917.63
    4    35    33    $ 60,000.00    $ 80,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 201,917.63    $ 262,917.63    $ 13,145.88    $ 276,063.51
    5    36    34    $ 60,000.00    $ 80,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 276,063.51    $ 337,063.51    $ 16,853.18    $ 353,916.68
    6    37    35    $ 66,000.00    $ 88,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 353,916.68    $ 414,916.68    $ 20,745.83    $ 435,662.52
    7    38    36    $ 66,000.00    $ 88,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 435,662.52    $ 496,662.52    $ 24,833.13    $ 521,495.64
    8    39    37    $ 66,000.00    $ 88,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 521,495.64    $ 582,495.64    $ 29,124.78    $ 611,620.42
    9    40    38    $ 66,000.00    $ 88,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 611,620.42    $ 672,620.42    $ 33,631.02    $ 706,251.44
    10    41    39    $ 66,000.00    $ 88,000.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 706,251.44    $ 767,251.44    $ 38,362.57    $ 805,614.02
    11    42    40    $ 72,600.00    $ 96,800.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 805,614.02    $ 866,614.02    $ 43,330.70    $ 909,944.72
    12    43    41    $ 72,600.00    $ 96,800.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 909,944.72    $ 970,944.72    $ 48,547.24    $ 1,019,491.95
    13    44    42    $ 72,600.00    $ 96,800.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,019,491.95    $ 1,080,491.95    $ 54,024.60    $ 1,134,516.55
    14    45    43    $ 72,600.00    $ 96,800.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,134,516.55    $ 1,195,516.55    $ 59,775.83    $ 1,255,292.38
    15    46    44    $ 72,600.00    $ 96,800.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,255,292.38    $ 1,316,292.38    $ 65,814.62    $ 1,382,107.00
    16    47    45    $ 79,860.00    $ 101,640.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,382,107.00    $ 1,443,107.00    $ 72,155.35    $ 1,515,262.35
    17    48    46    $ 79,860.00    $ 101,640.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,515,262.35    $ 1,576,262.35    $ 78,813.12    $ 1,655,075.47
    18    49    47    $ 79,860.00    $ 101,640.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,655,075.47    $ 1,716,075.47    $ 85,803.77    $ 1,801,879.24
    19    50    48    $ 79,860.00    $ 101,640.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,801,879.24    $ 1,862,879.24    $ 93,143.96    $ 1,956,023.20
    20    51    49    $ 79,860.00    $ 101,640.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 1,956,023.20    $ 2,017,023.20    $ 100,851.16    $ 2,117,874.36
    21    52    50    $ 87,846.00    $ 106,722.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 2,117,874.36    $ 2,178,874.36    $ 108,943.72    $ 2,287,818.08
    22    53    51    $ 87,846.00    $ 106,722.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 2,287,818.08    $ 2,348,818.08    $ 117,440.90    $ 2,466,258.98
    23    54    52    $ 87,846.00    $ 106,722.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 2,466,258.98    $ 2,527,258.98    $ 126,362.95    $ 2,653,621.93
    24    55    53    $ 87,846.00    $ 106,722.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 2,653,621.93    $ 2,714,621.93    $ 135,731.10    $ 2,850,353.03
    25    56    54    $ 87,846.00    $ 106,722.00    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 2,850,353.03    $ 2,911,353.03    $ 145,567.65    $ 3,056,920.68
    26    57    55    $ 92,238.30    $ 112,058.10    $ 27,000.00    $ 34,000.00    $ 61,000.00    $ 3,056,920.68    $ 3,117,920.68    $ 155,896.03    $ 3,273,816.71
    27    58    56    $ 92,238.30    $ ...
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