Lost Your Job? Use an RRSP Strategy

Employees who leave their jobs and receive retiring allowances should include an RRSP strategy in their planning to keep more of that money.

Whenever possible, avoid adding a lump sum into income in one tax year. The trick is to avoid the next higher tax bracket and rates, which makes tax and legal advice valuable before you sign off. You might take your severance over two tax years, for example. If you incurred legal fees to collect the money, you may be able to deduct them. But deductible legal fees must be reduced by the amount of the severance transferred to your RRSP. Unclaimed fees may be carried forward up to seven years.