Facts on using RRSP to pay debt - Toronto Star- Need Cash Pay Bills
He owes $50,000 on eight cards, and his payments will jump from about $2,000 a year to $9,000, a heavy load on a salary of $40,000 a year in Toronto. Federal legislation will soon give all RRSPs the protection from creditors already afforded to life insurers’ savings contracts, locked-in funds from pension plans and ordinary RRSPs in certain provinces. A new type of life income fund available starting this year permits 25 per cent of funds to be withdrawn. Outside Quebec, the withholding is 10 per cent for amounts up to $5,000, 20 per cent for amounts between $5,001 and $15,000 and 30 per cent for larger amounts. He would pay less tax, and need to withdraw less, if he spread his withdrawals and debt payments over more than one year. Learn more
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