Mary and Susan are a married same sex couple They have been married for 25 years and own their own home Their home is valued at $850,000 and they have a $200,000 mortgage Mary will be 50 this year and Susan will be 45 this year Mary works for Bell Canada and earns $125,000 per year She is a member of a DBPP that will provide her with a pension of $60,000 per year at age 65 Mary contributes 6 of her salary to the DBPP annually This contribution is matched by Bell Canada The pension entitlement represents 2 of her salary over the best 5 years of employment Susan works as an office administrator for ABC Company and does not have any form of pension plan Susan earns $45,000 per year Their number one goal is retirement planning Mary loves her job and plans on working until she is 65 Susan wants to retire when Mary does so that they can enjoy retirement and travel extensively There assets and liabilities are as follows Mary RRSP $25000 Susan RRSP $13,000 Susan Spousal RRSP $275,000 Mary Income $125,000 Susan Income $45,000 Home Value $800,000 Mortgage $200,000 Mary TFSA $55,000 Susan TFSA $10,000 Assume you are Mary and Susans financial planner and that Mary and Susan have hired you to complete a retirement plan for them Which of the following represents the first step in the financial planning process Setting goals Analyzing data Providing solutions Establishing the Client Planner Relationship As an advisor you recommend that Mary maximize her RRSP into her personal RRSP on an annual basis because she is in a higher marginal tax rate than Susan Is this the best strategy If so why if not please offer an alternative strategy and explain why it is a more appropriate strategy True False Given Marys income in 2018 is $125,000 and based on the information provided how much would Mary accumulate in RRSP eligibility in 2019 Assume an RRSP contribution maximum in 2019 of $26,500 $22,500 $18,750 $600 $0 How much is Marys benefit entitlement for RRSP calculation purposes $22,500 $600 $2500 $21,900 How much RRSP eligibility would Susan accumulate in 2019 $9000 $8100 $7950 $9540 What ages should you use for the retirement projections you prepare for Mary and Susan Marys age for both Susans age for both Marys retirement age and Susans life expectancy Susans retirement age and Marys life expectancy Explain why you chose the answer you chose How much would Mary contribute to CPP in 2018 Assume the YMPE is $57,500 $5346 $2054 25 $2673 $12,375 How much would Susan contribute to CPP in 2018 Assume the YMPE is $57,500 $4455 $2673 $5346 $2054 As Mary and Susans financial planner which of the following strategies would you recommend to them Maximize both of their RRSPs before doing other savings Maximize both of their TFSAs before doing other savings Maximize their RRSPs and use the tax refund to fund their TFSAs None of the above Explain why you chose this strategy At what age will Mary and Susan be forced to convert their RRSPs into a RRIF or annuity 69 65 71 68 Assume Susan decides to RRIF her RRSP at the age of 65 If the value of her RRIF at the beginning of that year is $57,500 how much is the minimum she has to take from the RRIF in that year There is no minimum $0 $2300 $2500 At age 67 Susan withdraws $27,500 from a RRIF created by the spousal RRSP Assuming Mary had contributed to the spousal RRSP up until Susan had turned 60 how much of the withdrawal would be attributed back to Susan as taxable income $27,500 Only the minimum portion of the withdrawal Only the amount above the minimum portion of the withdrawal $0 Assuming you are Susan and Marys financial advisor what advice would you provide them in terms of the use of TFSAs Are TFSAs appropriate strategy for Susan and Mary Why What is the yearly TFSA limit What are the benefits of using a TFSA What savings goals are TFSAs used for If they have never contributed to an TFSA what would their limits be (Assume the year is 2019) What happens as it relates to TFSA limits if a withdrawal is made from a TFSA

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Mary and Susan are a married same sex couple. They have been married for 25 years and own their own home. Their home is valued

Mary and Susan are a married same sex couple. They have been married for 25 years and own their own home. Their home is valued at $850,000 and they have a $200,000 mortgage. Mary will be 50 this year and Susan will be 45 this year. Mary works for Bell Canada and earns $125,000 per year. She is a member of a DBPP that will provide her with a pension of $60,000 per year at age 65. Mary contributes 6% of her salary to the DBPP annually. This contribution is matched by Bell Canada. The pension entitlement represents 2% of her salary over the best 5 years of employment.

Susan works as an office administrator for ABC Company and does not have any form of pension plan. Susan earns $45,000 per year.

Their number one goal is retirement planning. Mary loves her job and plans on working until she is 65. Susan wants to retire when Mary does so that they can enjoy retirement and travel extensively.

There assets and liabilities are as follows.

Mary RRSP $25000

Susan RRSP $13,000

Susan Spousal RRSP $275,000

Mary Income $125,000

Susan Income $45,000

Home Value $800,000

Mortgage $200,000

Mary TFSA $55,000

Susan TFSA $10,000

Assume you are Mary and Susan’s financial planner and that Mary and Susan have hired you to complete a retirement plan for them.

Which of the following represents the first step in the financial planning process?

Setting goals
Analyzing data
Providing solutions
Establishing the Client Planner Relationship

As an advisor you recommend that Mary maximize her RRSP into her personal RRSP on an annual basis because she is in a higher marginal tax rate than Susan. Is this the best strategy? If so why? if not please offer an alternative strategy and explain why it is a more appropriate strategy.

True
False

Given Mary’s income in 2018 is $125,000 and based on the information provided how much would Mary accumulate in RRSP eligibility in 2019. Assume an RRSP contribution maximum in 2019 of $26,500.

$22,500
$18,750
$600
$0

How much is Mary’s benefit entitlement for RRSP calculation purposes?

$22,500
$600
$2500
$21,900

How much RRSP eligibility would Susan accumulate in 2019?

$9000
$8100
$7950
$9540

What ages should you use for the retirement projections you prepare for Mary and Susan?

Mary’s age for both
Susan’s age for both
Mary’s retirement age and Susan’s life expectancy
Susan’s retirement age and Mary’s life expectancy

Explain why you chose the answer you chose.

How much would Mary contribute to CPP in 2018? Assume the YMPE is $57,500

$5346
$2054.25
$2673
$12,375

How much would Susan contribute to CPP in 2018? Assume the YMPE is $57,500

$4455
$2673
$5346
$2054

As Mary and Susan’s financial planner which of the following strategies would you recommend to them?

Maximize both of their RRSP’s before doing other savings
Maximize both of their TFSA’s before doing other savings
Maximize their RRSP’s and use the tax refund to fund their TFSA’s
None of the above

Explain why you chose this strategy.

At what age will Mary and Susan be forced to convert their RRSP’s into a RRIF or annuity?

Assume Susan decides to RRIF her RRSP at the age of 65. If the value of her RRIF at the beginning of that year is $57,500 how much is the minimum she has to take from the RRIF in that year?

There is no minimum
$0
$2300
$2500

At age 67 Susan withdraws $27,500 from a RRIF created by the spousal RRSP. Assuming Mary had contributed to the spousal RRSP up until Susan had turned 60 how much of the withdrawal would be attributed back to Susan as taxable income?

$27,500
Only the minimum portion of the withdrawal
Only the amount above the minimum portion of the withdrawal
$0

Assuming you are Susan and Mary’s financial advisor what advice would you provide them in terms of the use of TFSA’s
1. Are TFSA’s appropriate strategy for Susan and Mary? Why?
2. What is the yearly TFSA limit?
3. What are the benefits of using a TFSA?
4. What savings goals are TFSA’s used for?
5. If they have never contributed to an TFSA what would their limits be? (Assume the year is 2019)
6. What happens as it relates to TFSA limits if a withdrawal is made from a TFSA?