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Email this2:43 pm
June 15, 2016
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Hi... I been thinking about quitting my job and I was told by Omers If I leave my work of employment before the age of 55 I can cash out my pension but only so much . I believe its around 60% cash and the rest I need to invest ( government law ) If you can suggest where or what you would do with $200,000.00 investment please do suggest... Thank you
5:50 pm
October 21, 2013
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Can you clarify the "cash" vs "invest" requirement? Do you mean they would just write you a cheque for 200K? or is to be deposited into an RSP or similar?
Is the 200K the 'cash' portion or is it the 'invest" portion?
Is it an option to retire and still leave it all in the pension plan and bridge it til age 65?
6:13 pm
December 23, 2011
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local905 said
Hi... I been thinking about quitting my job and I was told by Omers If I leave my work of employment before the age of 55 I can cash out my pension but only so much . I believe its around 60% cash and the rest I need to invest ( government law ) If you can suggest where or what you would do with $200,000.00 investment please do suggest... Thank you
I think we need more info.
How old are you?
Do you realize having a government pension it is probably of of the most secure pensions one can have?
Why are you quitting?
Are you saying the amount remaining must be invested is the "locked in amount"?
If the latter is correct ..... at what age can you access it?
If the latter is correct....what are your plans to invest the "locked in amount"?
If you quit what pension indexing are you going to give up vs interest you will make on investing it?
What are you going to do the the cash amount they will give you?
Do you realize that will be a huge tax hit on you unless you plan to quit in January and not work for a year???
6:48 pm
June 15, 2016
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Ok, I will try to provide more info .... Next month I will be 55 . Once I get there my pension will then be lock in but before 55 I can cash out . By law I can't receive it all only a portion. The portion I can't cash is 214,000.00 . This amount has to be invested and I'm assuming until I retire . The amount I can cash is roughly 260,000.00 but there the penalty of 42% . That would be roughly 150,000.00 . And I know I will also have to claim this amount with my income tax . The reason behind it is to pay off my mortgage and hopefully be mortgage free . Afterwards, find another job . Government jobs might be great and all but not how I feel about it . I know local416 is so corrupted and I don't want to be in this environment any longer . I want to be happy . I know it may sound like I'm selfish but if you really hate your job and the people you're working with, would you stay ? How big of a cash hit in my income tax claim you think it would be roughly ? Lets say the total is 175,000.00 for the year .... Thank you both for responding it's very much appreciated
8:06 pm
April 6, 2013
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Sounds like you have something like this, from OMERS: Your Options When Leaving:
- Keep your pension in the OMERS plan until you retire
- Transfer your benefit to another OMERS employer
- Begin to receive your OMERS pension
- Transfer your OMERS benefit to another registered pension plan
- Transfer the commuted value (CV) of your pension
- Elect a cash refund of the commuted value of your pension if your pension is less than 4% of $54,900*
You are thinking of taking the commuted value (CV) of your earned pension out of the OMERS pension plan (through options #5 and #6) instead of option #1, leaving it in until you retire and start collect your OMERS pension.
Are you sure a combination of #5 and #6 is better than #1?
According to OMERS: Inflation Protection, your OMERS pension is 100% indexed to inflation, up to 6% each year.
The CV is an actuarial calculation. It doesn't mean that one could invest the same amount of money oneself and be guaranteed to replicate the defined benefit pension you would have received from the OMERS plan.
10:30 pm
October 21, 2013
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Sounds to me like the part you are required to invest (214K) would have to go into a Locked-in Retirement Plan, otherwise known as LIRA. Is that correct? LIRAs are basically the same as RRSPs except for a few qualifications such as minimum age at which you can access them and also any spouse you may have has some rights. There are very specific rules which govern them, but they will provide a retirement income if well invested. You can start to get an income from it before 65, I believe, but you need to check the rules. OMERS will be governed by the rules of Ontario.
It sounds like you have basically spent your whole career or most of it with the city if you have that much in your retirement plan. I'm wondering whether you have a plan for a second career. Jobs are usually hard to get at this age unless you have unusual skills, a family business to work in, or will accept a McJob.
You would likely take a very big hit on the income tax. If you have any RSP contribution room, you should fill it all in the year that you leave this job (assuming you take the money), plus the permitted $2000 overcontribution, in order to reduce the hit as much as possible. You can get a reasonable estimate of what it will cost by using this calculator, which works better in Firefox than IE. http://www.taxtips.ca/calculat.....ulator.htm If you have no dependents, and no RSP contribution room, you could be looking at a hit of up to 59,000 on 175,000. However, if you have a lot of RSP contribution room and you use it, all of it is deductible from income and could make a very substantial difference, depending on how much. This is one situation where there is no question but that an RSP is an excellent idea.
I know you are trying to think of ways of avoiding having your pension locked in, and want to pay off our mortgage, but I really would think twice about that and consider other options.
Being happy is a laudable goal. Getting rid of the job may or may not accomplish this. It may just leave you unemployed with precarious employment, and not happy - that is a risk. But if there is something else that you are yearning to do, and have been yearning to do for a while, then go for it! A couple of sessions with a Life Coach may help you to be really sure that you are doing what's right for you. (There are qualifications now for such people, including a master's degree at Royal Roads. Your EAP can maybe refer you to someone if you're interested.) Obviously I don't know you, and you are free to reject these comments.
In the "other options" department, as kanaka said, this kind of pension is a good one to have. I took my money out of OMERS, and now, in my 60s, wish I had not, but I didn't have nearly as much money in it as you do, so it didn't have a huge impact overall on my situation. You need to look at both the longterm and the short term both financially and personally and be sure you have it all covered before you take the leap.
So, back to specifics... Would the lump sum after taxes be enough to discharge your mortgage? Paying off the mortgage is just as laudable a goal as being happy. I wouldn't consider either of these as 'selfish'. You need to look very specifically at how you are going to get the income to live off between now and when you take your various pensions, and also how you will mange if you live to 90+. How much you have in the various pockets and how it is invested also very much matters (non-registered, RSP, TFSA, as well as the breakdown within these pockets.)
An indexed pension such as OMERS is not to be cast off lightly. I believe it's defined benefit - at least it used to be when I belonged to it.
You ask how you should invest the money. It's complicated, and really depends on your overall financial picture. The way things are right now, it would be foolish to expect it to deliver more than 5%, no matter what you put it into, maybe less.
Another question: If you do decide to quit your job and you want to do so before age 55 in order not to have your pension locked in, do you have to do this before your 55th birthday or do you have to do it before the year in which you turn 55? If the former, then you would be better off to postpone quitting until early January. Assuming your birthday isn't the first week in January, this would spread out your income more effectively. It's better to have a full salary in 2016 and then 150K in 2017 than 175K in 2016. You will gain on both gross and net income. This will also affect your CPP - the longer you can hang on to a well-paying job, the better your CPP benefits will be.
You are making a decision that will profoundly affect the entire rest of your life, however long it may be, not just the portion from now until normal retirement age, so make sure it's the right one for you.
I think there are a number of questions that need to be considered before you get to the question of how you might invest 200K or so. It must be considered as part of your overall financial plan, which should have a number of elements, not the least of which is a consideration of your other assets.
11:11 pm
April 6, 2013
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Loonie said
…
You would likely take a very big hit on the income tax. If you have any RSP contribution room, you should fill it all in the year that you leave this job (assuming you take the money), plus the permitted $2000 overcontribution, in order to reduce the hit as much as possible. You can get a reasonable estimate of what it will cost by using this calculator, which works better in Firefox than IE. http://www.taxtips.ca/calculat.....ulator.htm If you have no dependents, and no RSP contribution room, you could be looking at a hit of up to 59,000 on 175,000. However, if you have a lot of RSP contribution room and you use it, all of it is deductible from income and could make a very substantial difference, depending on how much. This is one situation where there is no question but that an RSP is an excellent idea.
…
The big income tax hit may not be necessary. This, from OMERS: First Steps After Leaving, suggests that the cash refund (option 6) may be done by a tax-deferred direct transfer to a regular non-locked-in RRSP:
Refund or Transfer of Contributions
Elect a cash refund of the commuted value of your pension if your pension is less than 4% of $54,900*
You can take a cash refund of the commuted value of your benefit if the annual pension you have earned is less than 4% of $54,900*. You may also make a tax-deferred transfer of the cash refund to your RRSP.*Year’s maximum pensionable earnings (YMPE) in the year you leave your OMERS employer – YMPE for 2016 = $54,900.
If that's the case, then the directly-transferred cash refund can then be withdrawn from the RRSP over multiple years. That would spread the tax hit over multiple years.
12:08 am
June 15, 2016
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Thank you all for responding, again it's very much appreciated . I will be 55 next month and my pension gets lock in once one turn 55 on their birthday . I'm single with no dependence . It's clearly I should to speak with a professional but who, what type ? As to what I will do afterwards, I'm really not sure but I really can't stand staying . I'm even thinking to sell the house and living in a tiny apartment. I don't need that much . I want to be around people who are honest not deceitful. Do you have any idea how difficult it is were by your co-workers believe you're a RAT and I really don't know why they believe this since I have never ratted anyone in my life but my co-workers think I am . To have this title on you co-workers can be very vicious
3:24 am
October 21, 2013
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There is a great deal to consider here, and much is at stake for you, so I don't want to mislead you.
I must admit, after reading all the posts here, I still am not confident that I understand the options before you.
Do you have perhaps an email or some written communication that you have received from OMERS which applies to your personal situation which outlines your options? If so, can you post it? (Leave out your name and email address.) If not, can you write to them and ask them again, so that you have it all in writing? I find that big pension plans are usually quite good at responding, and telephone conversations are just not adequate. We went through numerous back-and-forths over a period of a few years before my spouse retired, just to make sure we had it all clear.
My confusion is over what appears to be 2 pots of money - one that you can take out in cash and another that goes into or stays in some kind of pension plan (what kind? please use whatever wording you have been given so that we can follow the dots). But that may not be the case, and I am unclear if you have another option. I am also not confident that you understand it all yourself. Perhaps you do but that is not clear to me.
Thanks for the further details. As a stopgap response, I will say that I think it's really important that you don't do anything precipitous. Do you feel you are being harassed in the workplace? If so, what is the mechanism for dealing with that? I find that, generally, workplace definitions for harassment are rather weak and not very useful, but it depends on what yours says. Have you read your collective agreement on this?
You may feel your needs are minimal and that you don't need much money and so on. But this perception may be clouded by your need to get out of there. As you get older you will want certain conveniences. Trust me on that! And they cost money.
Have you drawn up anything which illustrates where your income will come from at various stages, assuming you live a long life? And have you squared that with costs, inflation, taxes etc.?
You seem to be between a rock and a hard place in the sense that if you simply quit and run with whatever cash they'll give you, you may be risking poverty down the line or even sooner. Yet at the moment you find yourself in an intolerable situation. Have you considered taking sick time for stress until you sort all this out? It must be very difficult to keep your mind on your work. I certainly know people who have done that, and some of them worked for your employer.
You may need help from more than one source. A Life Coach could help you sort out what you really want out of life and how you want to live it and how to pursue a line of work that you want to spend your time at. A Financial Planner can sort out the answers to how you will manage over time financially and what you need to do to reach your goals, but you do have to be careful who you deal with, and they charge what I think is a lot of money, maybe 2000 or so for the plan alone. Most intelligent people could figure this out for themselves if they set their minds to it, but you are in distress and may not be able to. Also, it takes time, as there is a learning curve. Your initial question suggests that you have little or no experience in investing. It really matters what other resources you have in terms of cash, RSPs, TFSAs etc. A therapeutic counsellor (psychologist, social worker, pastoral counsellor, physician etc. - just go to someone you are comfortable with for a start) may also be helpful if these issues are affecting the rest of your life, sleep, eating habits etc as well.
Much depends on specifics. If, for example, you have a "typical" Toronto home that's worth about a million, and you have perhaps 50k in TFSAs and 300K in RSPs and another 100K in cash, plus you can look forward to full OAS and a close-to-maximum pension from CPP, plus some unclear amount that you will get from OMERS in one form or another, it can be worked out what sort of income you can expect from this, both now and in the future, and you might be able to manage, particularly if you find another job. But those numbers are really important and you need to know what they are.
If you have no RSP, no TFSA, and are living paycheque to paycheque, and your house is out in the burbs, small and in need of major repairs and so only worth 500K, then you are looking at a very different scenario. I assume that if you had a lot of cash, you would have paid off the mortgage already, so you probably don't have that or TFSA and may not have RSP either.
If you feel comfortable giving us some numbers, that might also help us to understand your situation. You say you don't need much, but you still have a significant mortgage at 54, so something is not working out right here. Maybe it is costing you more to live than you realize. Do you have a budget? Is it realistic? Do you know how your expenses will change if you retire and can't find another job?
Can you start looking for another job before you leave? It's really tough out there at 54. You sound desperate, and leaving a job is not something you should do when you're feeling that way. Take a stress leave if you can get it, and give yourself time to work these things through. Speak to your physician to see if you might warrant a stress leave.
One decision at a time. I would say the first question is whether anything can be done about your work situation. You may feel you know the answer to that already, but leave no stone unturned. Second, can you get stress leave to help you cope? I shouldn't imagine you're sleeping very well at the moment, and that takes a huge toll. Third, what do you really want to be doing with your life? (life coach questions - often hard to see the answers when you're stressed). Fourth, what is the complete picture on your finances, now and future, net worth, income flow, costs to replace extended health benefits etc - lots of picky details? and, follow-up question, what do you need to do to ensure the happy healthy future that you seek? - it's not as simple as just leaving the job. Fifth, finding a strategy to actually do what you need to do - may require professional help. Sixth, implementation of strategy. All of this takes time. In a way, you are asking the last questions first, because you want so much to get out of the current situation. Perhaps you have a friend or relative whom you trust who can help you work your way through these things and help keep you track?
Does that make sense?
6:54 am
September 11, 2013
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local905, lots of good suggestions here for you. I have another (non numbers-based) perspective, which many here may disagree with. No matter what my financial situation, I'd NEVER give up a pension like you've got, particularly when you're so close. These pensions are the Canadian dream. And especially if my union sisters and brothers were the cause, I would NEVER let them "win", beat me down (from what I've seen, your local is typical, don't think it's rare). At this point, you need to get the emotional level way, way down. Go to your doctor, get a note and go on stress leave (I hate to advise this because it's one of the most widely abused tactics used by civil servants - I was one for a while too and it made me sick to see the taxpayer paying people, who had it easier than pretty much anyone else on the planet, to avoid work due to "stress"), the harassment you feel you've encountered certainly seems to qualify you. This will give you time and distance from your situation, that's the key, and you'll be better able to make a rational decision re what you want to do going forward. I'd stay away from "advisors", particularly if it involves payment of some kind for it - I firmly believe people can figure out what they need to do better without all the pseudo-experts out there, many of whom have made decisions they themselves later regret or have lives that are a mess. I'm confident in your ability to figure it out once you get emotions out of it as much as possible. The minute you walk out of there what preoccupies your life now will vanish, will no longer exist, so don't worry about that part, but the one thing I would not do is give up the lifelong security that OMERS pension provides. It's a solid financial base for whatever else you want to do in life going forward. The rest, you'll figure out as you go along - I recommend long walks in the great outdoors, I'm amazed at what becomes very clear after an hour or two of mindless physical movement. That's my 2 cents, feel free to ignore if it sounds too wacky to you! Good luck.
7:49 am
April 6, 2013
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local905 said
Thank you all for responding, again it's very much appreciated . I will be 55 next month and my pension gets lock in once one turn 55 on their birthday . I'm single with no dependence . It's clearly I should to speak with a professional but who, what type ? As to what I will do afterwards, I'm really not sure but I really can't stand staying . I'm even thinking to sell the house and living in a tiny apartment. I don't need that much . I want to be around people who are honest not deceitful.…
A month is not a lot of time to shop for and find a trusted advisor. You'll probably need to see someone like an actuary, who specializes in retirement situations. Stay away from the "free" advice from self-declared "financial advisors" who are product salespeople in disguise.
Keep in mind that your coworkers and your OMERS pension are not tied together. One can get away from the coworkers and still keep the pension.
Is the OMERS pension all or nothing? Would it be an option is to cash out some of the commuted value through option #6 (cash refund, perhaps direct transfer to a non-locked-in RRSP) and leave the rest in for option #1 (an OMERS pension later on retirement)?
I don't think it is easy to invest the same amount of money and get the returns one needs to replicate the inflation-adjusted pension OMERS will pay. One certainly will not be able to do it with just GIC's.
1:55 pm
June 15, 2016
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First off, GOD BLESS ALL OF YOU !!! Thank you so much for your advise. My brother for years would tell me if I ever quit he would cut off ties with me . This weekend he knew I couldn't take it any longer when I told him I don't care I am quitting . All he said if it's going to make you happy then do so . I know it may sound crazy but I have this non fear factor feeling if I do, I will be once again a happy person, the man that I want to be, not some angry bitter guy . Yes, I know I'm giving up a lot but is not having the benefits /// $$$$ all there is in life ? .. Another thing as to how corrupt local 416 is every time I apply for a job in a difference department I get rejected because I don't have blah, blah, blah experiences but yet over the 26 years I been there I see so many coworkers ( certain kind ) get other jobs and I know they don't have the experiences or any years close to what I have . Most are under 15 years . When I go to the union to grieve it I'm just wasting my time. I can get into more details about it but I would end up writing a book over it .... Other members see it as well but don't say nothing because they don't want to be harassed. Even my union just all got replaced with new board members and I know none of these new members . The old board members are facing some sore a charges towards stealing money from the members, it's still on going . Like I said people think government jobs are great. Yeah, they have pension/ benefits but I don't feel that way where I am at . By the way I'm in the solid waste department .... I was looking at my Omers data report as to how much I would make roughly if I stay my 30 years term . It pays roughly 2800.00 a month and that's also with the Omers bridge. So, I would be tax on 2800 which would give me, what ? 2200 a month after taxes . I'm just guessing taxes would be around that much, I don't know the real numbers ... I have a copy of my data report on my computer but I can't figure how to edit to remove my personal info name so I could paste it here . Maybe someone can tell me what software I could use to do such ? It's pdf file .... Also, I don't have a family doctor, I haven't seen a doctor over 10 years now ... Thanks
2:40 pm
October 21, 2013
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I think it's a bad move for you to just up and quit at this point. You don't need a promotion or fairness or nice co-workers at this stage. You need to have a goal that protects you. You just need to hang in for a year or so until your 55th birthday, at which point you can have a terrific Happiness Party.
Find a doctor. At your age, you need to have one anyway. Go on stress leave. If the first one doesn't agree, find another.
You may have convinced your brother (or perhaps he just gave up trying to argue with you), but you have not convinced any of us. Everyone who has commented on this thread so far has belonged to this forum for some time, and, I think it's fair to say, has earned the respect of others. Most, if not all, of us, are already retired, and have faced our own dilemmas. All are advising caution. STAY PUT.
Your optimism is not based on reason; it is based on emotion. If you are not clear what your options are, and it seems that you are not, then you are in no position to make a decision with such serious consequences.
I don't think there is anything else I can contribute.
5:45 pm
June 15, 2016
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Loonie believe me I understand what you're saying and REALLY appreciated everything you have said and the same with everything else who has responded . My decision isn't only base on my coworkers and I'm sorry that I forgot to mention it but it's my home which is draining me . I need about 60,000.00 just for repairs, add in my mortgage and I will never be free from debts and I believe it will only gets worse if I retire since I doubt if I can keep up with the expense . My thinking is to use my pension money and pay off the mortgage, find another job and bank every penny I can, hopefully within a few years I could fix the home and sell it . Afterwards, downside my living and invest what ever I have left ...
You're right I haven't thought it through well enough but I never notice before how much I have with Omers until this week and it has got me thinking. Though, I don't have much time another reason why I'm asking here for inputs ....
Thank you
8:24 pm
April 6, 2013
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local905 said
…
You're right I haven't thought it through well enough but I never notice before how much I have with Omers until this week and it has got me thinking. Though, I don't have much time another reason why I'm asking here for inputs ....
This is what I see from your posts:
- 55th birthday is next month. After that birthday, option #5 (transfer commuted value out to LIRA) no longer available.
- Total commuted value is about $474,000:
- $214,000 commuted value of pension that is not eligible for cash refund. If transferred out (option #5), it must be transferred to something locked in like a LIRA.
- $260,000 commuted value of plan benefit, eligible under option #6, for cash refund or possible tax-deferred transfer to non-locked-in RRSP.
- Pension will be around $2,800/month, fully-indexed to CPI (6% per year cap, any excess is cumulative) should the entire $474,000 commuted value be left in the OMERS plan.
You had mentioned that the $260,000 cash refund would have a 42% penalty. Not sure if that is really the case. That could be the 42% of income taxes payable from adding $260,000 to one's income in one year. You may wish to clarify with OMERS what that 42% is about.
Option #5, transfer out the $214,000 commuted value of pension, is no longer available after 55th birthday.
Are you sure that Option #6, refund or transfer out the $260,000 of plan benefits, is also not available after 55th birthday? You may wish to check with OMERS about that. Description of Option #6 makes no mention of the 55th birthday.
10:18 pm
October 21, 2013
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Sorry. I had missed the fact that your birthday is so soon. That does make your decision more difficult. How much notice do you have to give?
You should take seriously whatever sense Norman1 is able to make out of the numbers as regards OMERS etc. He has proven very good at that sort of thing.
How big is your mortgage? Most real estate in TO right now is "hot". 60K in repairs is a lot, but its significance depends on how much else you owe and what your income is going to be. Depending on how desirable your property is, in the current market, you should be able to sell it at a profit. You probably could benefit from a realistic appraisal of it. Unfortunately, you can't believe every realtor on that score, as some will quote you an inflated number just to get the listing.
I live in TO and have a close friend who is a realtor. Everything I am hearing from this realtor is that in most parts of the city there is a serious shortage of properties for sale right now. So, although it would be best to do the repairs before you sell, you can probably sell it "as is", unless the damage is structural.
It seems to me that if you are intending to sell it in the not too distant future anyway, and you want the monkey off your back in terms of carrying costs, you could accomplish that, and still keep your valuable OMERS pension, by staying on the job, sell the house while you still have a good-paying job and use your equity to move to a condo which you intend to live in during your retirement years. I am assuming that you will have enough equity to buy a suitable condo that you can afford to maintain, but you should confirm that. Once you've settled in your new home, then run the numbers again and see if you can afford to leave your job.
All the facts continue, in my estimation, to point to the fact that you'd be better off to stay in OMERS and find another way to deal with your house. The house now appears to be the urgent factor. If you just needed to get out of your workplace, whether it's this month or August doesn't really matter much.
If you can't paste in the pdf from OMERS, could you take the time to copy out what it says, word for word, omitting your identifying info?
You should also phone CPP and ask them how much you can anticipate from them based on earnings to date. They will give you an estimate over the phone.
Do you have any other major debt obligations, such as credit cards, child support, alimony?
Do you have any other significant assets besides the house? - for example, RRSPs, Tax-Free Savings Account (TFSA), GICs, savings accounts, recreational property?
Do you have any kind of budget that you currently work with? How much does it actually cost you to live now, annually?
Do you live alone, or do you have any dependents or housemates?
Sorry to be asking so many personal questions, but the answers matter in this situation.
1:53 am
June 15, 2016
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Thanks once again for you guys input . I live all alone. I have no family or kids and never been married , so it just me alone. I have 8,000.00 in RRSP, that's it ... I don't need to live in a home . I would be fine to live in apartment, much easier with expense . If by chance the housing market every crash ( Bubble ) I'm screwed . Also, I'm not in Toronto. I'm in Brampton and because of the repairs that are need to my town home it's only going to get worse . I have to sell my home, I can see if I don't I will have serious issues later and most likely when I'm retire if I were to take that route . My home now is probably worth somewhere near 270 to 325 but If I put the needed repairs I might get around 400 / + . Norman1 you are correct with those numbers and yes for me to cash out I have to do so before I turn age 55 . My understanding is if I take the 260 as cash I will pay 42 % penalty which would be around 150 . Once I do my income tax for 2016 I have to add the 150 pulse what I have earn at the end of the year. Which will also have a big hit ... I just asked the bank how much would it cost to pay off my mortgage and it's 150 lol
This is believe to be true as well
$214,000 commuted value of pension that is not eligible for cash refund. If transferred out (option #5), it must be transferred to something locked in like a LIRA.
The way I see it is I have no other choice but to pay off the mortgage or use the pension money to fix my home and sell it . Afterwards pay all the penalties I will face once I do my 2016 income taxes ... There no options for me to stay in this home . If I stay I believe it's going to finish me off . With all the BS I'm having at work and my home I'm asking whether if it's worth it all . I really don't see it ... Thank You
7:42 am
April 6, 2013
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local905 said
…
Norman1 you are correct with those numbers and yes for me to cash out I have to do so before I turn age 55 . My understanding is if I take the 260 as cash I will pay 42 % penalty which would be around 150 . Once I do my income tax for 2016 I have to add the 150 pulse what I have earn at the end of the year. Which will also have a big hit ... I just asked the bank how much would it cost to pay off my mortgage and it's 150 lol
…
Is "penalty" the exact word used in the statement from OMERS for that 42%? Not something else like "estimated income taxes" or "tax withholding"?
42% of $260,000 = $109,200 is a hefty penalty for taking the commuted value of the plan benefits out of OMERS. That's like giving up $109,200/$474,000 x $2,800/month = $645.06/month of your pension!
8:49 am
June 15, 2016
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It's what you said Loonie estimated income taxes ... How odd .... I asked to have my report estimate data they had all my figures showing now when I view it, it's no longer there. Omers has removed from my estimate report . I just finishing speaking to them about it and there like where do you see those figures of 260,000.00 / 214,000.00 ..How can one moment these numbers be in the report and now there not ?? .. So something is very odd . Loonie, now I'm told it's roughly 30% estimated income taxes which would net me a sum around 181,000.00 from 259,000.00 ... Something very odd and wrong is going on ...
By the way I'm rounding of numbers to the nears dollars
11:08 am
October 21, 2013
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OK, I think I’m beginning to get the picture. OMERS can’t give you a reliable percentage that will go to income tax because it depends on your total taxable income, and this is a figure that they do not have, as it depends on more than just what they will give you. So this is why they are giving different percentages at different times – they are guessing.
With only 8000 in your RSP, however, you probably could put an amount at least equivalent to most of your earnings from your job this year into RSP. This would be deductible from your taxable income this year, and would bring the tax bite down somewhat. I am not sure if you could use the amount from OMERs as well, but think you might be able to.
Right now, can you take aa look at your most recent “Notice of Assessment” from CRA, which you would have received this Spring after you filed your taxes, and tell me how much “RSP contribution room” it says you have?
Also, don’t forget to contact CPP and ask them how much you would get from them, based on contributions to date.
I am assuming you do not have a Tax-Free Savings Account. Am I correct that you do not have one, and that you do not have significant savings?
I agree that you probably need to get rid of that house. It’s a question of when and how. We will come back to that later, and also to the question of whether you are better off to quit the job now or later.
(Edited to revise RSP option.)
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