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Plan now to minimize OAS Clawback Later

Updated: May 5, 2020

Ever wonder if you’ll be affected by Old Age Security (OAS) clawback?

To give you an idea, OAS benefits are reduced for the July 2020 to June 2021 period when net income for 2019 exceeds $77,580.

To minimize OAS clawback, you need to reduce net income. During retirement an effective strategy is splitting pension income. But several strategies, including the following, can be initiated before retirement arrives.

Use a spousal RRSP

With pension income splitting, you can split up to 50% of eligible pension income. But with a spousal Registered Retirement Savings Plan (RRSP), you can place a greater amount of retirement income in your spouse’s hands and reduce your own income.

Invest in corporate class funds

Corporate class funds have lower taxable distributions than traditional mutual funds. You pay less tax on non-registered investments in income-earning years and reduce taxable income during retirement.

Maximize TFSA savings

Tax-Free Savings Account withdrawals are not taxable income and cannot reduce OAS benefits.

Make early RRSP withdrawals

If you retire early, you could withdraw RRSP funds while in a lower tax bracket. This strategy will reduce your minimum Registered Retirement Income Fund (RRIF) withdrawal, reducing net income.

Realize capital gains

If you plan on selling vacation property, rental property or other significant assets in the near future, you may want to sell before OAS pension begins. Triggering large capital gains while receiving OAS benefits could result in clawback.

If you'd like to discuss potential strategies for your retirement plan, contact us for a call or meeting.


Assante Capital Management Ltd.

1536 Gamble Place Winnipeg, MB R3T 1N6

Tel:  204-977-8022

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Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.  The services described may not be applicable or available with respect to all clients.  Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties.  Some services and products may not be available through all Assante advisors.  Services may change without notice.  

© 2017 by Humphries Wealth Group

© 2018 Assante Wealth Management

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