(April 18 – 16:00 ET) – The Department of Finance has released a package of draft technical amendments to the income tax rules relating to registered pension plans.
Finance says the draft amendments “clarify the application of existing income tax provisions, resolve certain conflicts with pension benefits legislation and respond to particular issues that have been raised by plan sponsors, pension consultants and others.”
Specifically Finance is proposing:
-Past service pension adjustments that are exempt from certification will not reduce RRSP room until the year following the year of the past service event. Under the existing rules, exempt PSPAs reduce RRSP room in the current year.
-Specified multi-employer plans would be modified to allow them to provide lump sum payments on termination or death equal to employee and employer contributions plus interest.
-The registration rules for lump sum commutation benefits would be modified to allow the commuted value to be calculated at the date of termination of active membership, adjusted for interest between the calculation date and the payment date.
-Early retirees who receive temporary bridging benefits before the Old Age Security program or the CPP or QPP kick in would be allowed additional benefits of up to 40% of the year’s maximum pensionable earnings and spousal bridging benefits.
Comments are due by June 30.
-IE Staff