Case One
Neta Burnstein had total income of $112,000 and earned income of $75,000 in 2019.Neta's 2019 Notice of Assessment reported unused RRSP contribution room of $12,000.Neta's T4 showed a pension adjustment of $5,000 in 2019.Neta anticipates a pension adjustment of $5,500 in 2020.
Required:
Calculate the maximum RRSP deduction that Neta can make for the 2020 taxation year.
Case Two (Independent of Case One)
Neta is 35 years old, and is considering investing $2,000 per year in a savings account at 8% or $2,000 in an RRSP at 8%, (both annual interest).The money will be invested for the next 30 years and will not be withdrawn until Neta retires.
Required:
Compare the valuation of each option (Savings vs.RRSP) net of taxes if Neta withdraws all of the money at age 65? Assume that the tax rate will be 35% every year until retirement.

Question

Quizplus · Accepted Answer

The Answer of Case One
Neta Burnstein had total income of $112,000 and earned income of $75,000 in 2019.Neta's 2019 Notice of Assessment reported unused RRSP contribution room of $12,000.Neta's T4 showed a pension adjustment of $5,000 in 2019.Neta anticipates a pension adjustment of $5,500 in 2020.
Required:
Calculate the maximum RRSP deduction that Neta can make for the 2020 taxation year.
Case Two (Independent of Case One)
Neta is 35 years old, and is considering investing $2,000 per year in a savings account at 8% or $2,000 in an RRSP at 8%, (both annual interest).The money will be invested for the next 30 years and will not be withdrawn until Neta retires.
Required:
Compare the valuation of each option (Savings vs.RRSP) net of taxes if Neta withdraws all of the money at age 65? Assume that the tax rate will be 35% every year until retirement.

Case One Neta Burnstein Had Total Income of $112,000 and Earned Income