| |  |  Questions
Answers| 1. Does a person need a financial advisor for money invested in a RRIF or can it be done by her or himself? | | | You do not need a financial advisor to handle your RRIF if you feel comfortable making the investment decisions yourself. In that case, use a self-administered plan for maximum flexibility. However, if the amount of money involved is significant and you are not an experienced investor, you may wish to seek professional advice. | | top | | | | 2. I am 71, can I purchase LIFs? | | | LIFs are life income funds. They can only be purchased with money from locked-in RRSPs or LIRAs. Since you are 71, you will already have converted all your RRSP money to an income plan. If you had any locked-in money, it is already in a LIF or an annuity, as RRSPs must be terminated by Dec. 31 of the year you turn 69.
So the answer is no, you cannot convert to a LIF at this stage, although if you have a younger spouse that still has an RRSP, a LIF is a possibility if some or all of the money is locked in. | | top | | | | 3. I will turn 69 in June and still have some earned income. My wife is two years younger. Must I convert to a RRIF this year with no further contibutions, or is there a way to continue contributions, possibly until my wife reaches age 69? | | | You must convert your RRSP to a RRIF (or buy an annuity) by Dec. 31 of this year. However, you are allowed to make a final RRSP contribution for 2002 before you convert, so you should take full advantage of that opportunity. If you have any carry-forward room from previous years, now is the time to use it.
After this year, if you still have earned income you can make contributions to a spousal RRSP on behalf of your wife, until she has to convert her plan as well.
| | top | | | | 4. Can a parent pay an adult child a salary for their use at university, etc., in order to reduce the parental taxes? | | | This would only be possible if you are operating a family business in which the child can perform meaningful work. The compensation must be reasonable in the context of the job and what it would cost to hire someone at arm's length to perform the same function. The child does not have to be an adult in this situation, but must be capable of performing the assigned tasks | | top | | | | 5. A friend used a line of credit to buy his house. Is he entitled to clam the interest he is paying on it as a tax deduction | | | If the money from the line of credit was used to pay for the house then no, the interest is not tax deductible. It would only be deductible if he had paid cash for the house and then taken a line of credit against it, using the proceeds for investment purposes | | top | | | | 6. I have invested in a GIC that is locked in for one year. I am eight months into the term. Am I able to withdraw that money and if so, what types of penalties would be levied? | | | GICs are normally locked in until maturity and cannot be cashed before-hand. However, some financial institutions will make exceptions. You should discuss the situation with the company that issued your GIC and see what their policy is.
Usually there is a penalty if they agree to cash in the security. But with only four months remaining on the term, it shouldn't be too onerous – assuming they agree to terminate it prematurely
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