Early Retirement Your Employer’s Idea? You Have Options

For those who become unemployed, Employment Insurance (EI) benefits may be available and they are taxable. In addition, if you are a high-income earner in the year you receive the benefit, these benefits may also be subject to repayment.

This will happen if you have received regular EI benefits in the previous 10 years, and your income exceeds the annual income threshold for these purposes. That threshold is currently $63,500. An RRSP contribution can help to bring income down and avoid the clawback. Be sure to check whether you have to repay your EI benefits prior to the RRSP deadline so that you can minimize this clawback by making an RRSP contribution.

Other types of EI benefits that are not considered “regular benefits” are not subject to repayment. They include:

• EI-funded financial assistance paid while you are taking part in an approved employment program (Box 17)
• Tax-exempt benefits received by status Indians (Box 18)
• Tuition assistance (Box 20 or Box 21)
• Maternity benefits, parental benefits
• Sickness benefits
• Compassionate care benefits

Evelyn Jacks is President of Knowledge Bureau, home of the MFA-Retirement and Estate Planning Designation^TM. Call 1-866-953-4769 to register.

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