Retiring

You are retiring? Congratulations!

Retirement: 7 things you should know

1. Eligibility

You are eligible if:

  • You are between 45* and 64 years of age;
  • You have contributed to the Québec Pension Plan for at least one year;
  • You are already retired;
  • You have owned your shares for at least 730 days.

* You can redeem your Fonds de solidarité FTQ shares as of age 45 provided you collect retirement benefits under an employer’s pension plan.

2. When to submit your request

You can request a redemption as soon as you are eligible for retirement even if you still work, provided however that you will be retired within three months of the date your request is received.

3. Shares eligible for redemption

The Fonds can redeem all shares held for at least 730 days.

4. Share redemption price

The share price is usually published around January 5 and July 5 of each year.

Contact Shareholder Services to find out the options if you submit your request during one of these transitional periods or if you are retiring during one of these periods or during the three months following the end of one of these periods. You can also consult the simplified prospectus.

5. Taxes

When you cash in all or part of an RRSP, the amount is taxable and must be included in your income tax return in the year you withdraw the funds. Income tax on RRSP shares is calculated based on the rates in effect at the time of redemption.

However, no tax is withheld if you transfer your Fonds RRSP shares to another plan such as another RRSP or a Registered Retirement Income Funds (RRIF).

Tax withheld on amounts withdrawn from an RRSP*

Amount cashed in (gross)

Québec

Federal

Total

$5,000 or less

16%

5%

21%

$5,000.01 to $15,000

16%

10%

26%

$15,000.01 or more

16%

15%

31%

* These figures are subject to change.

6. Request processing time
If you provide all the required documents, your request will be processed within 30 days from the time the Fonds receives your request.
7. Share purchase after a redemption
While you can purchase Fonds shares again after a redemption for retirement, you will not be entitled to any tax credit.

Phased retirement

1. Eligibility

You are eligible if:

  • You are 50 years old or over;
  • You have contributed to the Québec Pension Plan for at least a year;
  • You are a salaried employee;
  • You have reached an agreement with your employer * to reduce your regular work time by at least 20% until retirement.

* If you have more than one employer, the total reduced work time must be at least 20%.

2. When to submit your request

You can submit a redemption request as soon as you begin the phased retirement.

You can submit another redemption request one year after the first disbursement. At that point, you will once again have to show that you are still in phased retirement. You will be eligible to redeem the same amount as the first time (see point 3 below).

3. Shares eligible for redemption

The Fonds de solidarité FTQ can redeem all shares held for at least 730 days and acquired before the beginning of the phased retirement.

The amount of the eligible redemption is determined when the first request is submitted, up to:

  • An amount equal to the lost earnings for the year;

or, if the amount is lower,

  • The balance in the account divided by the number of years remaining to full retirement.
4. Share redemption price

The share price is usually published around January 5 and July 5 of each year.

Contact Shareholder Services to find out the options if you submit your request during one of these transitional periods or if you are retiring during one of these periods or during the three months following the end of one of these periods. You can also consult the simplified prospectus.

5. Taxes

When you cash in all or part of an RRSP, the amount is taxable and must be included in your income tax return in the year you withdraw the funds. Income tax on RRSP shares is calculated based on the rates in effect at the time of redemption.

However, no tax is withheld if you transfer your Fonds RRSP shares to another plan such as another RRSP or a Registered Retirement Income Funds (RRIF).

Tax withheld on amounts withdrawn from an RRSP*

Amount cashed in (gross)

Québec

Federal

Total

$5,000 or less

16%

5%

21%

$5,000.01 to $15,000

16%

10%

26%

$15,000.01 or more

16%

15%

31%

* These figures are subject to change.

6. Request processing time
If you provide all the required documents, your request will be processed within 30 days from the time the Fonds receives your request.
7. Share purchase after redemption
While you can purchase Fonds shares again after a redemption for retirement, you will not be entitled to any tax credit.

WHAT IS SÉCURIFONDS?

The Fonds de solidarité FTQ has created a subsidiary, SÉCURIFONDS Inc., that works in partnership with SSQ, Life Insurance Company Inc.

This partnership offers a safe, guaranteed product to those who wish (or must) roll over their Fonds de solidarité FTQ RRSP savings to another investment vehicle.

There are no subscription fees, and management fees are affordable and competitive.

Learn more

What is an RRIF?

An RRIF, or Registered Retirement Income Fund, is a fund registered with the Canada Revenue Agency under which you regularly receive income during retirement.

You may roll over, on a tax-sheltered basis, your RRSP savings to an RRIF, and you can do so until you turn 71.

Its objective: regularly provide you with income during retirement.

What is the SÉCURIFONDS product?

By choosing SÉCURIFONDS, you purchase an annuity contract from SSQ, Life Insurance Company Inc., the partner with whom the Fonds de solidarité FTQ has entered into an agreement so that its shareholders may obtain a safe retirement product.

What are the SÉCURIFONDS features*?

  • The capital rolled over from your RRSP is invested in a balanced segregated fund.
  • You benefit from a maturity guarantee of 100% of the capital invested at the time of subscription **.
  • In the event of death, interest at an annual simple rate of 4% on the capital invested is added to the 100% guarantee***.

* For more details on SÉCURIFONDS, refer to the Information Folder.

** The application date of the maturity guarantee depends on the age of the annuitant at the time the first contribution is made to a fund in the contract:

  • If, at that time, the annuitant is age 55 or younger, the application date of the maturity guarantee is the date of the annuitant’s 65th birthday;
  • If, at that time, the annuitant is over age 55, the application date of the maturity guarantee is the end of the 10-year period that follows this contribution.

The application date of the maturity guarantee is established separately for each contract. It is established based on the date of the first contribution to a fund. Subsequent contributions made to the same contract do not affect the application date. For more details, refer to the Information Folder.

*** The guaranteed value upon death is 100% of all contributions made to funds in the contract for this guarantee, plus an annual simple return of 4% calculated daily, if the death of the annuitant occurs before age 80. If the death of the annuitant occurs at age 80 or older, this guaranteed value is 100% of all contributions made to funds in the contract for this guarantee. For more details, refer to the Information Folder.

What is a segregated fund?

A segregated fund is an investment fund offered by an insurance company. The term “segregated” means that it is managed separately from the insurer’s other assets.

Though similar to the funds offered by banks and investment companies, segregated funds include guarantees that are not offered by these financial institutions.

Discover savings opportunities

Are you just a few years away from retirement and getting ready to prepare for it or are you currently retired and interested in working part-time or starting a new career?

If you are in either of the above situations, you may start or continue to invest in a Fonds de solidarité FTQ RRSP and benefit from substantial savings.

I plan to retire in 5 years, can I become a Fonds shareholder?

Yes you can. However, you must be under age 65 and you must not have requested redemption of your Fonds shares, in whole or in part, before the end of the tax year in which you are claiming the tax credit.

According to the Fonds share redemption policy, I must hold my shares for at last 730 days. Must I stop contributing 2 years before I retire?

The 730-day holding period only applies to the last shares purchased. Therefore, any amount you invest today must remain invested for 730 days. It should be noted that all shares held for at least 730 days are eligible for an immediate redemption (if you meet one of the redemption criteria).

This requirement has been put in place so that the two levels of government can recover their 30% tax credits.

It is therefore in your best interest to contribute and benefit from the 30% tax credits.

Must I repay the 30% tax credits when I redeem the shares held in my RRSP or outside an RRSP?

No. Except for two government plans, the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP), no tax penalties are imposed to a Fonds shareholder who requests the redemption of his or her shares.

I contribute to a spousal RRSP and plan to retire within 5 years. Must I stop contributing to the Fonds?

No. The contributor gets the tax deduction, and the spouse owns the RRSP. To avoid being taxed, the contributor must comply with the “3-December 31” rule.

For instance, if the contributor stops contributing by December 30, the RRSP holder will be able to cash in his or her RRSPs two (2) years later without any tax consequences to the contributor.

Note: Retirement income splitting is allowed; under such rules, you may split annuity payments from an RRSP (but not withdrawals from an RRSP) starting at age 65.

I still have a few working years, and have significant unused contributions. How can I reduce and maximize these unused contributions?

An interesting way to maximize your unused contributions is to invest in the Fonds RRSP to obtain the additional tax credits of 30% and then invest these credits in another RRSP.

By investing an amount substantially similar to the amount required to purchase a conventional RRSP, you will end up with two RRSPs! By doing so, you will quickly use up your unused contributions, increase your retirement savings and diversify your investments.

I am a salaried employee and wish to reduce my number of work hours as I am getting closer to retirement. Can I withdraw amounts from my RRSPs to offset the financial loss caused by the reduction in my work hours?

Yes. You may invoke the “Phased Retirement” redemption criteria if you meet the following conditions:

  • You have reached age 50;
  • You have contributed to the Québec Pension Plan for at least one year;
  • You have reached an agreement with your employer to reduce your regular work time by at least 20% until retirement.

I am receiving Québec Pension Plan (QPP) benefits and am still working. Can I invest in the Fonds?

Yes. If you earn employment or business income of at least $3,500 during the year, you will be entitled to the Fonds’ 30% tax credits.

Government pension plans will not be enough if you want to have a comfortable income at retirement. Over and above government pensions, you must plan for another savings vehicle (such as an RRSP).

I receive Québec Pension Plan pension benefits. Can I request the redemption of my Fonds shares?

Yes. If you receive Québec Pension Plan pension benefits, the Fonds can redeem all the shares you have held for at least 730 days or transfer such shares to another financial institution.

It should be noted that a shareholder who redeems shares under the retirement criterion can no longer invest in the Fonds.

The Guaranteed Income Supplement (GIS) is a social initiative intended solely for individuals with low income. Can I cash in my Fonds shares and not be penalized with a decrease in my GIS benefits?

Yes. Individuals with low income who were unable to save large amounts in an RRSP can cash in, at or after age 65, their Fonds shares, whether held in an RRSP or not, without being penalized.

These individuals can therefore benefit from their savings. They must however have held their shares for at least 730 days to be eligible for redemption.

I recently retired and am interested in working part-time. How can I continue to benefit from the 30% tax credits?

You can continue to invest in your Fonds RRSP and benefit from additional tax credits of 30%.

You may also purchase Fonds shares for holding outside an RRSP and get tax credit totalling 30% of the amount invested. How? By meeting the following criteria:

  • You are a salaried employee;
  • You are under age 65;
  • You have not requested redemption of your Fonds shares, in whole or in part, before the end of the tax year in which you are claiming the credit;
  • You earn employment or business income of more than $3,500 per year.

I am a 71 year old retiree. Where can I transfer the amounts I have accumulated in the Fonds RRSP?

You can transfer the amounts you have accumulated in your Fonds RRSP to SÉCURIFONDS, an investment vehicle offered by our partner, SSQ, Life Insurance Company Inc.

The amount transferred to this new financial product is invested in a balanced segregated fund registered in an RRIF, with a 100% capital maturity and death benefit guarantee, subject to certain conditions.

For more information on retiring, please refer to the Fonds’ prospectus or contact Shareholder Services.

To learn more about SÉCURIFONDS >


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