Comments on: CARP Is Full Of CRAP http://www.moneysmartsblog.com/carp-is-full-of-crap/ Investing and Personal Finance Sat, 11 Sep 2010 00:43:11 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Should The Government Bail Out Pension Plans? http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-65542 Should The Government Bail Out Pension Plans? Sat, 13 Mar 2010 19:48:23 +0000 http://www.moneysmartsblog.com/?p=1838#comment-65542 [...] that the government should fix this – I find it ridiculous that they were able to change the RIF minimum payment rules last year thanks to CARP’s constant nagging which was a complete waste of time yet something [...] [...] that the government should fix this – I find it ridiculous that they were able to change the RIF minimum payment rules last year thanks to CARP’s constant nagging which was a complete waste of time yet something [...]

]]> By: This and That: Stocks are cheap but could get even cheaper http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8899 This and That: Stocks are cheap but could get even cheaper Fri, 07 Nov 2008 04:44:13 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8899 [...] Four Pillars takes issue with CARP’s stand on mandatory RRIF withdrawals. [...] [...] Four Pillars takes issue with CARP’s stand on mandatory RRIF withdrawals. [...]

]]> By: Four Pillars http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8856 Four Pillars Wed, 05 Nov 2008 18:30:23 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8856 Ram - thanks for mentioning the Chevreau article. Looks like Jimmy and I are on the same page. CARPs response to it is still ridiculous - they are assuming the "78 year old" is 100% invested in equities and won't spend the withdrawal. If she doesn't need the money then why does it matter if the portfolio depletes before she does? Why didn't she spend it when she was young? MGL - thanks for that article. Looks like my timing for this post was accidentally quite good. I will say that one point which does have some validity is the fact that in a market crash you are withdrawing a percentage amount of the account balance as of the beginning of the year which doesn't seem fair except for the fact that in an 'up' year, you are also withdrawing a percentage of the beginning of the year balance which results in a smaller percentage amount. I should do another post on this. Ram – thanks for mentioning the Chevreau article. Looks like Jimmy and I are on the same page. CARPs response to it is still ridiculous – they are assuming the “78 year old” is 100% invested in equities and won’t spend the withdrawal. If she doesn’t need the money then why does it matter if the portfolio depletes before she does? Why didn’t she spend it when she was young?

MGL – thanks for that article. Looks like my timing for this post was accidentally quite good.

I will say that one point which does have some validity is the fact that in a market crash you are withdrawing a percentage amount of the account balance as of the beginning of the year which doesn’t seem fair except for the fact that in an ‘up’ year, you are also withdrawing a percentage of the beginning of the year balance which results in a smaller percentage amount. I should do another post on this.

]]> By: MoneyGrubbingLawyer http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8855 MoneyGrubbingLawyer Wed, 05 Nov 2008 18:11:30 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8855 Mike, there was an interesting article in the Globe and Mail today about RRIFs and mandatory withdrawals- http://www.theglobeandmail.com/servlet/story/LAC.20081105.COPENSION05/TPStory/?query=rrif The author suggests that the mandatory withdrawal age should be pushed back to let people continue to make tax deferred contributions even longer. It's a little more nuanced of an approach than that taken by CARP, but the points you make above are equally applicable. Losing the ability to make tax-deferred contributions doesn't affect seniors' abilities to continue to save in any way. Mike, there was an interesting article in the Globe and Mail today about RRIFs and mandatory withdrawals- http://www.theglobeandmail.com/servlet/story/LAC.20081105.COPENSION05/TPStory/?query=rrif

The author suggests that the mandatory withdrawal age should be pushed back to let people continue to make tax deferred contributions even longer. It’s a little more nuanced of an approach than that taken by CARP, but the points you make above are equally applicable. Losing the ability to make tax-deferred contributions doesn’t affect seniors’ abilities to continue to save in any way.

]]> By: Canadian Capitalist http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8854 Canadian Capitalist Wed, 05 Nov 2008 18:01:29 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8854 Jon Chevreau posted Finance Minister Jim Flaherty's response which is along the lines you've pointed out. RRIF withdrawal rules have been around for a while and investors should plan around that by having low-risk assets like cash and bonds to meet tax obligations. Jon Chevreau posted Finance Minister Jim Flaherty’s response which is along the lines you’ve pointed out. RRIF withdrawal rules have been around for a while and investors should plan around that by having low-risk assets like cash and bonds to meet tax obligations.

]]> By: Four Pillars http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8853 Four Pillars Wed, 05 Nov 2008 16:46:50 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8853 Brad - thanks. Guinness - you're right. I don't mind any special interest groups pushing their own agenda - my point is that they shouldn't use logic that doesn't make any sense. Charles - that's not the way it works. An in-kind transfer out of a RRIF is the same as a normal withdrawal for tax purposes. If you do the in-kind transfer into an open account then your ACB will be set to whatever the market value of the securities is on the day of the transfer and the market value of the securities will be added to your taxable income. Cheap - someone has to pay taxes! :) Another point which is related to #3 is that proper financial planning has to come into play. If I have money I don't need when I'm retired then I'm going to regret the fact that I saved too much. Mike Brad – thanks.

Guinness – you’re right. I don’t mind any special interest groups pushing their own agenda – my point is that they shouldn’t use logic that doesn’t make any sense.

Charles – that’s not the way it works. An in-kind transfer out of a RRIF is the same as a normal withdrawal for tax purposes. If you do the in-kind transfer into an open account then your ACB will be set to whatever the market value of the securities is on the day of the transfer and the market value of the securities will be added to your taxable income.

Cheap – someone has to pay taxes! :) Another point which is related to #3 is that proper financial planning has to come into play. If I have money I don’t need when I’m retired then I’m going to regret the fact that I saved too much.

Mike

]]> By: Mr. Cheap http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8852 Mr. Cheap Wed, 05 Nov 2008 16:30:14 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8852 Good points! My parents are going to have to start mandatory withdrawals soon, and they're been happy to put it off as long as possible... I guess its no fun being hit with a tax bill for money you don't need. Good points! My parents are going to have to start mandatory withdrawals soon, and they’re been happy to put it off as long as possible… I guess its no fun being hit with a tax bill for money you don’t need.

]]> By: Charles in Vancouver http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8851 Charles in Vancouver Wed, 05 Nov 2008 16:22:44 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8851 Not to mention: If I am "forced" to withdraw X dollars from a RRIF during a down market, I pay tax on $X. If I withdraw in-kind and leave the investment to rebound, the capital gains will only be taxed at half the usual rate. If I did not have to withdraw those dollars now, they'd grow inside the RRIF and I'd have to pay full tax on all of it when it comes out. So isn't it more desirable to withdraw in-kind during down markets than up? Not to mention: If I am “forced” to withdraw X dollars from a RRIF during a down market, I pay tax on $X. If I withdraw in-kind and leave the investment to rebound, the capital gains will only be taxed at half the usual rate. If I did not have to withdraw those dollars now, they’d grow inside the RRIF and I’d have to pay full tax on all of it when it comes out. So isn’t it more desirable to withdraw in-kind during down markets than up?

]]> By: Gates VP http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8850 Gates VP Wed, 05 Nov 2008 15:36:54 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8850 Indeed they are, and this is exactly the type of information that both seniors and the general voting public needs to know. I can appreciate the role of lobbyist groups, but citizens need to be able to "call BS" when it's the case. Thank you for doing just that. Indeed they are, and this is exactly the type of information that both seniors and the general voting public needs to know.

I can appreciate the role of lobbyist groups, but citizens need to be able to “call BS” when it’s the case. Thank you for doing just that.

]]> By: guinness416 http://www.moneysmartsblog.com/carp-is-full-of-crap/comment-page-1/#comment-8849 guinness416 Wed, 05 Nov 2008 15:13:48 +0000 http://www.moneysmartsblog.com/?p=1838#comment-8849 I don't know anything about CARP, but I guess they're mostly made up of wealthier retirees? Old people vote and organize and engage with politicians regularly and reliably. In Ireland, they just got a budget change to means test medical cards for the elderly overturned through a pretty impressive display of grey power. It's hard for me to begrudge them pushing their issues. Us younger people should get our arses in gear and do the same. Posts like this one are a decent contribution to that. I don’t know anything about CARP, but I guess they’re mostly made up of wealthier retirees? Old people vote and organize and engage with politicians regularly and reliably. In Ireland, they just got a budget change to means test medical cards for the elderly overturned through a pretty impressive display of grey power. It’s hard for me to begrudge them pushing their issues. Us younger people should get our arses in gear and do the same. Posts like this one are a decent contribution to that.

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