More than one-third of Canadians do not know the difference between a Registered Retirement Savings Plan and a Tax Free Savings Account, a BMO study found.
If you’re among them, you will want to know that they’re both savings tools, that offer tax-free growth.
RRSPs give a tax deferral, while TFSAs don’t. RRSP contributions are tax deductible, which means the individual’s taxable income is reduced by the amount contributed in a given tax year. But tax will be payable when the RRSP is cashed in; if your income will be lower when you’re retired, you could come out ahead.
With a TFSA, a person does not get a tax deduction now, but they also do not pay tax when they withdraw the funds. TFSA contributions are limited to $5,000 per year, while RRSP contributions are based on income. They’ve been in effect for three years now, so the limit if you haven’t started yet is $15,000.
Further, if you take money out of your TFSA, you can put it back in later, while withdrawals from an RRSP cannot be added back into your contribution room.
RRSPs must be fully withdrawn or transferred to a Registered Retirement Income Fund or an annuity by the end of the year in which a person turns 71. TFSAs never have to be converted, at any age.
The BMO study found that 40 per cent of Canadians did not know the difference between TFSAs and RRSPs, even though 44 per cent of Canadians have a TFSA and more than 60 per cent have an RRSP.
“While your present financial situation and life stage will impact how you contribute and the benefit derived from making a contribution, both the TFSA and RRSP are strong and flexible savings vehicles that together can help you reach short-term and long-term financial savings goals,” said Tina Di Vito, head, BMO Retirement Institute and author of 52 Ways to Wreck Your Retirement … and How to Rescue It.
The study found that the average annual TFSA contribution is $3,700, while the average RRSP contribution in 2010 was $4,700.
The study is based on two surveys, one done online between Oct. 17 and 20, with a sample of 1508 Canadians, 18 years of age or older. A probability sample of the same size would yield a margin of error of 2.5 per cent, 19 times out of 20. The second survey was done online Nov. 21 to Nov. 24 using Leger Marketing’s online panel, LegerWeb, with a sample of 1520 Canadians. A probability sample of the same size would yield a margin of error of 2.5 per cent 19 times out of 20.

Find this article posted by Tracy Sherlock at The Vancouver Sun.

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According to a recent survey by CareerBuilder.ca, 45% of Canadian workers said they have felt bullied at work. Meaning that it is highly likely that we (or someone we know) will be affected by bullying at some point in our career.

One-third of people surveyed said they suffered health problems as a result, while 26% decided to quit their jobs to escape the situation.

Despite our increased awareness of bullying and its side effects, bullies are still getting away with it because the majority of incidents go unreported.

What is bullying?

Bullying can take many forms ranging including verbal abuse, the undermining of work, constant criticism, hurtful comments or setting someone up to fail.

Although definitions and experiences of bullying differ, if the behaviour is carried out with intent, and is prolonged and makes working-life uncomfortable it may be considered bullying.

There is nothing healthy about bullying. It is hugely detrimental and has far-reaching consequences including negative effects on morale, productivity and personal health. It can increase staff turnover, create lawsuits, and seriously affect an organization’s bottom line.

One way to recognize if a co-worker is being bullied is generally a change in their behaviour. They may become withdrawn, experience loss of confidence or have difficulty sleeping. How well you know your colleague will determine how you handle the situation, however, tackling the issue head-on isn’t always the best answer. Instead, try to get some quiet time with them saying that you’d noticed something wasn’t quite right and encourage them to talk. The best thing you can do here is to be a good listener and, if bullying is the root cause, offer practical advice.

No matter how tempting it may be to become emotionally involved, a showdown with the bully is not the right approach. Instead, refer to the harassment procedure in your employee handbook. It’s a great place to start, and from there you can create a plan of action and regain control.

If you or a colleague would like to talk about bullying, please don’t hesitate to contact me at cori@jouta.com or on 604 488 8885.

NOTE: If you are an employer, it is vital you are aware of the new bullying and harassment legislation in Bill 14 that came in to effect on July 1st (visit our site for more information on what this means for employers).

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What you could be doing TODAY that will help you retire earlier tomorrow:

TAG Financial will teach YOU, the business owner, which tools to use and how to utilize corporate profits to retire earlier than you thought possible.

Stay Tuned for next seminar date!

Please RSVP to Shawn Perryman at sperryman@tagf.com or call the office at 604-513-9169.

We hope to see you there!

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Welcome and thank-you for reading “TAG Lines”, our second quarterly TAG Financial E-Letter. In this edition I would like to draw your attention to raising health costs.

Health Costs Continue to Rise – How Do Small Firms Control Costs?

We hear every day from our politicians how provincial health care rates are going up and up, over 20% last year.  Since I started in this business the percentage of the provincial budget spent on health care has risen from 35% to now over 50%.  Left unchecked, it will be 100% by 2035 “LEFT UNCHECKED, 100% OF ALL TAXES BY 2035 WILL BE SPENT ON ONE MINISTRY – HEALTH”.

We are at the start of major changes in how health care is being purchased.  We have no choice.  For small companies (less than 20 lives), we have developed 100% pooled plans for all health and dental packages.  We are the only 100% pooled package in Canada.  Others are partially pooled but we are 100% pooled.  What this does is put all the “small” companies into one large pool or group so the large group becomes 100% credible.  This immediately gives us lower administration costs, higher breakevens and reserves that are owned by the client, not the insurer.  All of these provide savings year over year of +6-8% when comparing to the front line carrier.  The Sirius 100% pooled plan is the best plan for under 20 person groups.  Give us a call to discuss what is best for you.  Provincial health care plans will and are downloading on to group plans, that’s a fact!  Reviewing your needs is the only way to control your overall health costs.  Thanks for reading , I look forward to chatting with you!

John

Please contact me through email or at my office at 604-513-9169 with your questions about your current plan or any general questions you have.

The post A Few Words from John: Mar 2012 appeared first on Tomlinson Alliance Group Financial | Insurance Brokers.

1) The first is to increase salaries, the benefit of which is that you are rewarding employees in a way that will last beyond the New Year. The standard method is to decide upon a base increase that all employees will get (usually reflecting the current cost of living increase), then create a continuum of increases that mirror performance.

For example all employees get a 2% increase, while good performers get a 4% increase and excellent performers get a 6% increase.

2) The second is to spread your budget between salary increases and performance-based bonuses. First, decide on either a standard pay increase linked to the cost of living increase for the year, or one based on the current market rate for similar roles. Then choose a bonus amount directly related to their performance for that year.

Rewarding performance through an annual pay increase is like the gift that keeps on giving. If employee performance slips the following year you cannot revoke the increase. Nor should you give additional increases if performance improves. Instead the employee will continue to receive the higher salary based on their first year’s performance. Whereas if you have tied bonuses to performance, if employee performance declines so too does their bonus. They would not receive any residual rewards based on their first year’s good performance.

Consider also the difference in hard dollar value. Assume that Fred’s salary in 2012 is $50,000 and that his performance remains constant for the next five years. Your practice allows for a pay / bonus increase of 5% each year. If you tie performance to salary increases and allot the entire 5% each year to an increase in pay it will cost you $16,883 more than if you provided Fred with a 2% salary increase and a 3% bonus each year.

From an employee satisfaction and morale perspective which is the most effective method for Fred?

If you have any questions about employee compensation or would like to review your own compensation structure please don’t hesitate to Cori at cori@jouta.com or on 604 488 8885.

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-Article submitted by Manulife Financial

Many Canadians are aware that small businesses are a major force in today’s economy. With the establishment of cost-effective technologies such as the internet and personal computer breaking down the high cost barriers of entry, many entrepreneurs are testing the waters of self-employment like never before.

Along with greater independence and the increased earnings potential that self-employment can provide comes a list of potential financial risks. Unlike the majority of Canadians who contribute to and benefit from the Canadian Pension Plan, Employment Insurance and company sponsored benefit programs, if their enterprise either fails or they succumb to a disability, small business owners are on their own. This hard fact makes personal financial planning an essential strategy for the owner of a small business to succeed.

The challenges that many small business owners face are often industry-specific and diverse. However, on a more personal level, the financial planning challenges that individuals face often share common ground. For example, during the early stages of a small business start – up when personal income and business income are often on and the same, cash flow management can be an issue. In addition, finding ways to minimize tax is an important step in maximizing personal income.

JUST STARTING

Once a business is up and running, small business owners face additional challenges that are unique. For example, once a business owner becomes profitable, they need to carefully consider what to do with their money. The natural tendency is to reinvest all of their profits back into their business. But there are a number of personal risks associated with this strategy. A better alternative may be to invest a portion of the proceeds into market-based investments such as segregated funds, which have the unique feature pf providing potential protection from creditors. That way, if the business fails, the owner would have diversified their personal assets and assets and may have something to show for their efforts.

UP AND RUNNING

For mature businesses, owners are advised to continue the financial planning process to protect their personal interests. Two issues that need to be addressed at this state are safeguarding their business in case of sudden disability and succession planning. In terms of protecting the business, strategies such as purchasing “key person” insurance and business loan protection are worthy considerations since it can protect the owner from the unexpected. Life insurance can also fund capital gains tax on a a business at death, offer split dollar arrangements and buy-sell funding.

For owners looking to pass on their business, succession planning is vital if the owner wants to plan for the significant capital gains charges generated by the sale of, or the transfer to either family members or partners with a state in the business.

Business owners must understand the importance of beginning the planning process early. Once business is in trouble, it is almost impossible to establish a plan that protects their interests effectively. Perhaps the most important factor in creating a successful personal financial plan for business owners centres on the issue of timing. Contact your advisor today!

The post TAG Lines: Issue 1 appeared first on Tomlinson Alliance Group Financial | Insurance Brokers.

Welcome and thank-you for reading “TAG Lines”, our first quarterly TAG Financial E-Letter. In this edition I would like to introduce you to TAG and our team by highlighting three important points about us. In the future you can expect some insight from myself into industry trends and other important facts about the insurance industry.

Thanks again for reading and please don’t hesitate to contact anyone from the team if you have any questions, comments, or even some interesting information. Thank-you to our clients for your trust and loyalty and thank-you to those potential clients for tuning into our newsletter and giving us some time out of your day this quarter.

DID YOU KNOW:

1) TAG is a member of the Better Business Bureau and for 12 years has been the exclusive Brokerage in British Columbia to market the Sirius Better Business Bureau Group Benefit Plan.  We are very proud of our association with the BBB and our work with the hundreds of clients and thousands of employees we service under the Sirius BBB Plan

2) TAG provides comprehensive planning for small business owners.  TAG works with PPI Advisory in developing innovative solutions for long term strategic planning, succession plans, and retirement options for independent business owners.  PPI Advisory’s focus is squarely on being the national distributor of choice for financial and insurance firms serving the business owner market in Canada.  TAG Financial is one of a few select brokerages PPI Advisory works with across Canada.  TAG brings solutions to many of our Group Benefit Business Owner Clients outside of the provision of Group Benefits.  Click here to find out more about PPI Advisory.

3) TAG works with YOUR employees to assist them in their insurance and financial planning needs.  TAG will put on seminars (complete with pizza over lunch or early morning muffins and doughnuts for breakfast meetings) for groups of employees or work with employees and their families one on one to analyze their current situation and provide options that will be better suit them (if applicable).  A financially healthy employee is a productive employee at work.

Please contact me through email or at my office at 604-513-9169 with your questions about your current plan or else I DARE YOU to compare your current plan with what we can provide and if we can’t beat your current plan we will give you a gift of $1000 just for your time.

The post A Few Words from John: Jan 2012 appeared first on Tomlinson Alliance Group Financial | Insurance Brokers.

The plan administrator of any group benefits policy is an instrumental part of the proper day to day operation of the plan. They are a key link between the insurance carrier and client.  The following points below outline 3 key responsibilities of the plan administrator.

1.      New Employee Enrollment

When employees are hired to a company with a group benefits policy, the plan administrator is responsible for ensuring that the new employees are enrolled on the plan after the specific waiting period for that group has ended, e.g. 3 Month from the date the employee is considered a full time employee. If a plan member is not enrolled on the plan within 31 days of the end of the specified waiting period, they will be considered a Late Applicant.

As a Late Applicant, the plan member will be required to answer a medical questionnaire for themselves and family members. In this Late Application situation and depending on the medical questionnaire, coverage could be declined by the carrier.  There are typically also dental limitations that will be applied automatically to the Late Applicants coverage for a period of time.

2. Updating Employee Salary Changes

Employees Salaries can change from once the group was started and it is the Plan Administrators responsibility to ensure that when the salary’s of the employees change, that they are updated on the group benefits plan as well. If the group benefits plan has one of the following benefits: life insurance, short term disability or long term disability, the salary of a employee will have an impact on there coverage. If the salary is left unchanged could result in any one of the following:

-          Lower than Expected Benefits – Should a employee go on Disability claim, the  amount of insurance they receive could be much lower than expected and put the employee in a difficult situation

-          Loss of Coverage

-          Loss of Trust and Confidence in the Insurance Company and Benefits plan

3. Termination of Departing Employees

When a employee leaves a company, it is the plan administrators responsibility to report this employee termination to the insurance carrier. If the employee is not terminated on the system, premiums will continue to be charged for this individual and there will be no restrictions on new claims made until the insurance carrier is notified. This is especially important when groups have drug cards.

What we have listed are 3 key roles the plan administrator plays in the operating of their group benefits plan. It is important for the plan administrator to know what support they have in their role and who to go to for assistance. If you have questions, please contact a member of the TAG Financial team at (604) 513-9169.

The post TAG Lines: Issue 2 appeared first on Tomlinson Alliance Group Financial | Insurance Brokers.

An employee handbook is a manual given to all employees containing everything they need to know about their company. It contains advice and guidance on topics ranging from vacation pay to policies, procedures, compensation and benefits, right through to where things are located and who’s responsible for what (i.e. ordering a pen if you need one!). With all this information at your fingertips it becomes an essential go-to-guide that helps you and your business become more streamlined and productive.

It’s highly recommended that all companies, no matter what size, invest in an employee handbook. A word of caution though: avoid using templates. An employee handbook should be as personal and unique as your company, and customized entirely for your needs and culture. Don’t let anyone persuade you that one-size-fits-all!

Once you have your handbook in place, it’s vital that it’s kept up-to-date annually to reflect ever-changing laws and practices. Employees should sign-off annually that they understand the terms and conditions within it.

This then leads to another very important role of the handbook. By having lawful policies and procedures in place, employees understand what should and shouldn’t be taking place and how to correctly deal with something if it arises. This helps protect a company against lawsuits including harassment claims, discrimination claims, and ultimately saves time, money and heartache.

If you have any questions about employee handbooks or would like a free assessment as to how your company might benefit from one please don’t hesitate to Cori at cori@jouta.com or on 604 488 8885.

For more information about the Jouta Performance Group visit www.jouta.com

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