Hi,
I would appreciate your assistance in understanding the best option for me given the following circumstances;
I was employed on a contract basis with an employer who offered a defined pension benefit for contracted employees. When my contract ended, I was given an option to cash out on the PV of my pension contributions of approximately $22,400 or to transfer a tax-exempt portion of the pension of approximately $15,500 to an RRSP while the remainder should be withdrawn in cash and subject to tax deduction. I was incorrectly told by the pension advisor that the cash withdrawal is subject to the same tax brackets of employment income so I elected a cash withdrawal on the entire amount as it is within the lowest tax bracket per my understanding. Upon withdrawal, 30% was withheld and it was treated as an RRSP withdrawal and I cashed only $16,680. The withdrawal took place in April 2016 and I currently have approximately $12,500 in my RRSP room. I have worked by the end of the year but my total earnings until year end were quite low $14,200.
My question is if I fill in schedule 7 within the first two months of 2017, can I put back the withdrawn amount of $16,680 on a tax-free basis to my RRSP and get a full refund for the difference (at time of filing my taxes), that were the taxes withheld? Or I will only be able to put back the tax exempt portion of $15,500 and get the full taxes withheld back when I file my taxes? The other thing to consider is my contribution room, should I put back only up to my current RRSP room of 12,500?
Also, are there any implications on my current RRSP room with any of those options? From a tax planning perspective, will I actually be better off with the current situation as I will get a refund anyways for the difference of 30%- 15% given my current income level, when I file my taxesl?
Thank you very much and would appreciate your assistance in understanding the best option given my circumstances and the situation I'm in.
Regards,
moneywise_2017
I would appreciate your assistance in understanding the best option for me given the following circumstances;
I was employed on a contract basis with an employer who offered a defined pension benefit for contracted employees. When my contract ended, I was given an option to cash out on the PV of my pension contributions of approximately $22,400 or to transfer a tax-exempt portion of the pension of approximately $15,500 to an RRSP while the remainder should be withdrawn in cash and subject to tax deduction. I was incorrectly told by the pension advisor that the cash withdrawal is subject to the same tax brackets of employment income so I elected a cash withdrawal on the entire amount as it is within the lowest tax bracket per my understanding. Upon withdrawal, 30% was withheld and it was treated as an RRSP withdrawal and I cashed only $16,680. The withdrawal took place in April 2016 and I currently have approximately $12,500 in my RRSP room. I have worked by the end of the year but my total earnings until year end were quite low $14,200.
My question is if I fill in schedule 7 within the first two months of 2017, can I put back the withdrawn amount of $16,680 on a tax-free basis to my RRSP and get a full refund for the difference (at time of filing my taxes), that were the taxes withheld? Or I will only be able to put back the tax exempt portion of $15,500 and get the full taxes withheld back when I file my taxes? The other thing to consider is my contribution room, should I put back only up to my current RRSP room of 12,500?
Also, are there any implications on my current RRSP room with any of those options? From a tax planning perspective, will I actually be better off with the current situation as I will get a refund anyways for the difference of 30%- 15% given my current income level, when I file my taxesl?
Thank you very much and would appreciate your assistance in understanding the best option given my circumstances and the situation I'm in.
Regards,
moneywise_2017