*** I'm new in this forum and I sent this message yesterday but it seems it didn't go through so I'm re-sending it.
I just got 'let go' from my company. I got a 28 weeks pay severance which I can elect to defer for payment in 2013. I will also receive my last payment + accrued vacations and others (this can't be deferred afaik).
I'm planning how to maximize this pay by reducing taxes and getting the most out of it possible.
Previously, I've already maximized my TFSA room: I have 20k (+interest) in it and another 20k (+interest) in my wife's TFSA (she doesn't work).
This is what I initially thought to do:
1. Ask my employer to defer 100% for pay till jan/2013
2. When it is paid, ask my employer to deposit 100% into my RRSP.
3. Of course, family will reduce expenses as possible.
4. Till EOY my family will use the last payment (which will include unpaid vacation and others) + withdrawals from my TFSA as needed. This should minimize my yearly income and 2012 taxes.
5. By EOY, any money left in my bank will go to RRSP to further reduce 2012 taxes.
5. In Jan/2013 I'd receive my severance pay into my RRSP
6. For 2013, I'll keep taking out from our TFSAs.
7. Early 2013 I should have some tax return to help me cope with expenses.
8. Around may/2013 I should start receiving EI right? then that'll help me withdraw less from TFSA
9. When TFSA are exhausted, withdraw from RRSP.
Does this plan sound like a good idea? It is simple but I don't know if I'm missing some piece of information.
- I've read in some forums that not all the severance can be put into RRSP, can anybody confirm if yes or no? I worked the last 6 years for this company.
- If not all the severance can be deposited into RRSP by my employer, I guess I can do it on myself after I receive it in my bank right? it'd be taxed before receiving it though but I can try recover the tax via increasing my RRSP contribution 2012.
Of course, the minute I step out the company I started looking for another job, I even got some phone calls already so this plan is intended for worst scenario case.
Also, I do have plenty of room in my RRSP so that's no concern.
Any advices or adjustments to recommend?