RETIREMENT COMPENSATION ARRANGEMENT "RCA"

Retirement Compensation Arrangements "RCA" as defined in the Income Tax Act are arrangements which are made outside the registered pension plan system and are intended to "top up" retirement benefits over and above those benefits received from registered plans. With an RCA a trust will receive funds from an employer and make payments after the employees retirement or termination. Since the employer receives a deduction for contributions to the plan, a 50% refundable tax applies to the payments made to the trust which is refunded when the taxable payments are made to the employee.

HOW MUCH CAN I CONTRIBUTE ?

There is no limit that can be contributed to the RCA except that it must be reasonable in the circumstances. There are no actuarial calculations involved. There are no restrictions on the types of investments the RCA makes. Popular investments are tax sheltered life insurance and loans to an operating or investment holding company.

• An RCA can be a very flexible pension plan for when you retire. Among the benefits are:
  - a tax-deductible expense that will reduce tax on company earnings
  -a superior  sumplemental pension for the employee or owner
  -significant capital for tax deferred re-investment
  - assets are excluded from plan holders estate and therefore are exempt from probate tax
  -absolute tax savings if employee is in lower tax bracket after retirement when RCA funds are paid out and taxed
  - a creditor protected retirement vehicle
  -an excellant vehicle to remove trapped cash from corporation and "purify" the shares for capital gains exemption
•  -can be funded via tax-exempt universal life insurance
• EXTREMELY FLEXIBILE

DOES IT APPLY TO ME ?

The cash flow benefits are dependant upon several variables such as tax rates, investment capital, investment return and timing of the income distribution. In genreal, if you have maxed out your RRSP contribution limit and have investment capital that you wish to defer taxes on then you should seriously consider and RCA

HOW CAN WE HELP ?

RCA Establishment:
We provide all the required documentation and CCRA filings to ensure that your RCA is promptly and correctly established.

RCA Administration:
We provide ongoing RCA administration which includes:
-providing trustee services which include safe custody and investing of plan assets, continious monitoring of legislation and court cases related to RCA's to ensure compliance, release of funds to individual employees in accordance with the terms of the Agreement, complete plan reporting to the employer, together with individual plan statements for each employee participating in the RCA

Easy access to ongoing support via toll free telephone, fax, or e-mail

If you prefer we are happy to assist your accountant in the implementation of your RCA

For more information call us at 1-866-mytaxes.