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Posts from the ‘Tax’ Category

The OAS Pension Recovery Tax What To Do if the Clawback Ain’t For You (Part 2)

Introduction

Now that you know how the OAS pension clawback is applied and its actual effects on your bottom line in after-tax dollars, I want to pass along ways you can organize your affairs so that you can get (and keep!) as much of your Old Age Security Pension that is humanly possible. Since a lot (but not all) of these techniques focus on keeping your taxable income down, you might also save some income tax dollars, too, if you’re not careful.

Before diving in, I realized that there was one additional situation where I see seniors taking an unwanted sojourn into the clawback zone that merits comment: the curse of the saver. If you are one of those thrifty and savvy investors who actually grow their incomes during retirement, you could unwittingly end up in the clawback zone at some point. Even if you don’t become a regular inhabitant, you still may be an occasional visitor during years you report significant capital gains. Accordingly, this article is written for those of you as well in the hopes of keeping your visits to this unpopular destination as infrequent as possible.

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The OAS Pension Recovery Tax: What To Do if the Claw back Ain’t For You

If you really want to light a fire in belly of most middle class retirees, I strongly suggest turning the conversation to how their OAS pensions are reduced if their taxable incomes top about $71,000 as of July, 2014. More specifically, they will lose $.15 for every dollar in taxable income they receive above that point until, if they make enough, their entire OAS pension of $6,618.48 (what most long-time Canadians receive if they take their pension as soon as possible as of May, 2014) is a thing of the past. I plan to use this and a subsequent article or two to explain how the claw back works and some steps you can take to minimize the impact. Today’s offering will set the stage and explain why dividends may not be as good as advertised when the claw back comes calling.

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Participating Life Insurance – The Third and Final Chapter

For those of you waiting with bated breath, here is the third and final installment in my series on Participating Whole Life Insurance aka "Par Policies." The first and second chapters of this exciting story describe what these things are and how they work, including some information on what the insurer considers when determining what to pay you in policy dividends each year, and exploring your different choices for what to do with these things, along with the tax consequences. Today, we get practical. I'll talk about some of the different types of Par Policies currently available, how you can use them to help fund your retirement and, perhaps most importantly, what to consider when you're looking to buy a policy. With no further ado, here goes . . .

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More on Par Policies a.k.a. “Participating Whole Life Insurance”

Introduction

This article continues the conversation begun in my last article on Par Policies. For those of you who haven't read it or have quickly repressed the details from your memory, here's a brief recap. Par Policies are a type of permanent life insurance that allows policyholders to reap some of the insurance company's rewards in exchange for taking on some of its risks. You take on these risks by paying a higher initial premium. The insurer doesn't expect its costs each year to be as high as it assumed when calculating your premium, so policyholders typically get some of their extra premium dollars back each year through something called a "policy dividend." How much do you get back? This is stated as a percentage and is called the "dividend scale." I'll now talk a bit more about this delightful thing and will see where the conversation goes from there.

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