There is something about the bleak darkness of December. The mornings fail to brighten noticeably before the busy day begins, then all too soon, the snowy afternoons turn to evenings blanketed in ice fog.
As a young boy I recall walking hand-in-hand with my newly-single mother on a snowy December evening in North Vancouver. We didn't have much, and the shopping trip didn't result in a heavy load to carry in our arms on the short walk home. But the rare snowfall, made the Christmas lights along our street glow more magically than usual. Even the slush along the sidewalk was a delightful distraction for my six-year old feet.
As we carried our gifts and groceries along, a man stopped in a car along the curb and spoke to my mother, offering her a ride. She advised that we only lived a couple of blocks away, but he persisted, gushing some flirty comments her way. She gestured toward me, indicating that she was otherwise occupied with her son. Even this didn't stop him from trying to charm her, but she was in no position to relent and he finally gave up and drove off.
I was puzzled. Who could possibly be interested in my mother that way?
As we walked a little further, I looked up, and saw a bit of a smile cross my mother's face, and noticed a little bounce in her step. Even after seven kids and a messy divorce, she still had it.
We made our way home, her burden clearly lightened by the passer-by, my mind full of questions about strangers, and how it could be that one could seem to make my mom so happy.
Our house was dark, no Christmas lights had been set up yet, and no tree graced our front window. On the doorstep we nearly tripped over a cardboard box, with a cookie sheet covering it. Ginger snaps, butter tarts and shortbread covered the cookie sheet, while the box itself contained a ham, some yams, and various assortments of gifts and goodies. It was from the people at our church, and now it was me who was elated. What a score! No pride or embarrassment at being the recipient of charity even remotely crossed my mind.
Santa comes to different people in different ways.
Recently some workers in our city received a gift which probably felt long overdue, and hopefully brightened their December. Canfor's Rustad mill finally declared itself permanently closed, thus triggering the processing of severance packages for its employees. Considerations for those employees include the following and more:
Eligible Retiring Allowance: For some, the severance payment may be considered a retiring allowance under Canadian income tax rules. There are special tax rules for retiring allowances and ways to
reduce the withholding taxes which may apply.
These rules allow the transfer of an eligible retiring allowance to your own RSP without
affecting your regular RSP contribution room. Your employer is not required to withhold tax on
any portion of the eligible retiring allowance that is transferred directly to your RSP. The eligible portion of your retiring allowance is determined by your employer using a special formula.
Non-eligible retiring allowance
Although the non-eligible retiring allowance does not qualify under the special rollover rules, you can still
make an RSP contribution to your own RSP or to a spousal RSP provided you have sufficient RSP contribution
room.
If your employer is willing, you can advise them to make a direct RSP contribution based on your RSP
contribution room.
There are many other important considerations on retiring allowances.
As always, everyone's situation is a little different, and it is crucial that your strategies be approved by a designated accountant.
Mark Ryan is an advisor with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at 250-960-4927 or [email protected].
