Retirement savings: do not toy with them. Ever.
A funny thing happened during the
SOA - common sense came under attack from a tax professor.
One of the earliest things we ever learned, was that you don't touch your
RRSPs until you retire. Or engage in a special government program to finance the purchase of, say, your house.
Then along came "tax week" where an instructor fed us all sorts of crazy ideas, such as "perhaps the person's retirement savings aren't doing so well". The logic was that if they could invest in something more profitable than their retirement portfolio they should pull money out and put it there.
In some extreme situations perhaps this may make sense. While preparing for the
UFE, though, we came across a question where this scenario popped up. A man has several assets he can sell to raise money to buy out his sister's share in the family business.
Should the RRSP be up for sale?
The solution to the real UFE question was, "for all that is good and holy, please don't." I'm paraphrasing slightly, but the key message to take away was that if you didn't stop him from cashing out off his RRSP, you weren't going to get full marks.
Which makes perfect sense if you haven't been listening to crazy or elaborate theories that rely on you deciding to take over the man's life and to convince him not to sell other assets.
What's the moral of this story? Careful whose advice you follow.
We've been getting some very good advice which has served us well through two exams. And there have been some things we would've been better of not knowing.
Hopefully you'll be able to discern what is good and bad advice yourself - some other time I'll explain how this applies to many other aspects of your life beyond accounting.
Like what, you may ask?
Consider journalism.
Remember that reporters don't give equal weight to everyone with the right answer, they just give equal weight to everyone with something to say.
It's up to you to discern which side is telling you the truth, and which only thinks it's telling you the truth.
In a fit of irony, I'm going to end this series of thoughts with the disclaimer from Wikipedia's RRSP page in case you haven't already read the
original ASX disclaimer.
The above is not intended to replace tax or investment advice. It
presents an overview of the topic only ignoring several areas,
including certain penalties and risks involved with RRSPs. See Canada Revenue Agency's web pages on RRSP or a professional tax preparer for more information if preparing a tax return and details of RRSP penalties. See an Investment Advisor for information on risks of investing.