Case One
Marsha had total income of $112,000 and earned income of $75,000 in 2017.Her 2017 Notice of Assessment showed unused RRSP contribution room of $12,000.She and her employer each contributed $2,500 to her RPP in 2017.Marsha anticipates a pension adjustment of $5,500 in 2018.
Required:
Calculate the maximum RRSP deduction that Marsha can make for the 2018 taxation year.
Case Two (Independent of Case One)
Marsha is 35 years old.She is considering investing $2,000 per year in a savings account at 8%,or $2,000 in an RRSP at 8%.The money will be invested for the next 30 years,and will not be withdrawn until Marsha retires.
Required:
A.Calculate the valuation of each option,net of taxes,if Marsha withdraws all of the money when she turns 65? Assume that her tax rate will be 35% every year until she retires.
B.How much could Marsha contribute to her RRSP each year if $2,000 is the net cost of her investment after the tax savings from her contribution?
Correct Answer:
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Case Two
A.Savings Account:
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