The treatment of a contribution as being made to another type of IRA instead of the IRA to which the contribution was initially made. For instance, an individual may make a participant contribution to a Traditional IRA but may later recharacterize the contribution to a Roth IRA. Roth IRA conversions can be reversed by means of a recharacterization, however, this movement of assets must include earnings (or losses).
A late-in-life career change. Recareering is not just a job change, but a move to a completely different career path. Money, power and prestige are prime motivators for many people switching careers, but others do it to pursue a passion or make a lifestyle change. Recareering can take two forms: it can be voluntary or it can occur unexpectedly. In voluntary recareering, an individual's current career might not provide the interest, passion or money that the person is seeking. Recareering can occur unexpectedly when a person's job is eliminated and there are few other opportunities in his or her field of expertise. People often recareer later in life as a way of transitioning into retirement. Many individuals consider changing their careers or lifestyles to pursue fields that have always interested them, or to step out to launch their own businesses.
Assets invested in an RRSP. RRSP contributions can be made at any time and for any amount up to an individual’s contribution limit for the year. If a contributor does not make the maximum allowable contribution, the balance of unused contribution room from 1991 onwards is carried forward indefinitely. This allows people to make up for the years that they did not maximize their allowed RRSP contributions. Because RRSP contributions can be made at any time, are tax deductible and can be made in cash or in-kind, they present a tremendous opportunity for reducing income taxes.
1. The requirement for a person to reinvest a certain amount of money into their retirement fund after he or she previously requested and obtained a return on the deposits made to the fund during a set time period, in order to receive a certain payout from the fund upon retirement.2. A cash management policy used by the Bank of Canada, where money is transferred from the central bank to the chartered banks. 1. If an employee is eligible at anytime to request a refund on the contributions made to a retirement fund, they will have to redeposit back into the fund at some point to retain the level of retirement pay they're due to receive before receiving the refund and to maintain the age at which they are eligible to retire. This repayment is referred to as a redeposit service.2. By transferring money to the chartered banks, there is an injection of funds into the money supply. The purpose of increasing the money supply by a redeposit is to prevent interest rates from climbing too high.
A monetary contribution to a retirement plan. Retirement contributions can be pretax or after tax, depending on whether the retirement plan is qualified, how much the contribution is in relation to the contributor's income, and whether the contributor has made previous contributions that would limit tax deductibility. In most corporate, private and government retirement plans, an employee's retirement contribution is matched in some way by the employer. This is referred to as an "employer match", rather than a contribution.
One of three methods by which early retirees of any age can access their retirement funds without penalty before turning 59 ½. Normally, funds withdrawn before age 59 ½ are assessed a 10% early withdrawal penalty. Funds must be withdrawn as substantially equal periodic payments as outlined by Internal Revenue Code Section 72(t) and must continue for five years or until the retiree reaches 59 ½, whichever is longer. If withdrawals are stopped, all funds that have already been withdrawn become subject to early withdrawal penalties. The annual distribution amount is calculated by dividing the retirement account balance on December 31 of the prior year by the retiree's remaining life expectancy as determined by the IRS's life expectancy table. This means that an increase in the retiree's account balance will lead to larger distributions and a decrease in the retiree's account balance will lead to smaller distributions. The two other methods for early, penalty-free retirement withdrawals are the fixed annuitization method and the fixed amortization method. The required minimum distribution method is considered to be the simplest. Each method can result in quite different distribution amounts.
The amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year. These required minimum distributions are determined by dividing the prior year-end fair market value of the retirement account by the applicable distribution period or life expectancy. Some qualified plans will allow certain participants to defer beginning their RMDs until they retire, even if they are older than age 70.5. Qualified plan participants should check with their employers to determine whether they are eligible for this deferral.
The date by which a qualified plan participant or IRA owner must begin receiving required minimum distributions from his or her retirement account. This date occurs on April 1 following the calendar year the participant reaches age 70.5. Some qualified plans may allow participants who have reached this age to delay the RBD until April 1 of the year following the year they retire. This option to delay the RBD, however, is not available to employees who own at least 5% of the business that adopted the qualified plan.
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