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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #1  
Old 12-12-2017, 10:56 PM
BetterRobert BetterRobert is offline
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Default RSP's less 25%?

I was served with a general application today, and under my wife's two RSP accounts, they are described as:

RSP National Bank
$9,633.78 less 25%
on valuation date: $7,224.75

RSP Manulife
$33,492.88 less 25%
on valuation date: $25,119.66

Can someone please explain why they are devalued 25%, and if this is contestable?
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Old 12-12-2017, 11:26 PM
denbigh denbigh is offline
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mine and ex partners were all devalued as well, and I think it has something to do with future tax implications. I am not entirely sure, but I believe it is standard to do this, and I am pretty sure ours were all devalued 30%, but I cant quite remember.
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Old 12-13-2017, 10:43 AM
clusterone clusterone is offline
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Quote:
Originally Posted by BetterRobert View Post
I was served with a general application today, and under my wife's two RSP accounts, they are described as:

RSP National Bank
$9,633.78 less 25%
on valuation date: $7,224.75

RSP Manulife
$33,492.88 less 25%
on valuation date: $25,119.66

Can someone please explain why they are devalued 25%, and if this is contestable?
Yes, since this is a plain vanilla RSP - it's to estimate for the taxes that would be paid upon withdrawing the funds. Normally, the value of the RSP is shown within 'asset' section of your financial statement, and the estimated tax liability (i.e. 25% of the balance) is shown as a 'liability'.

The rates should be based on your average tax rate at the time of the withdrawal. Ideally, one would be in a lower tax bracket because of retirement, so this rate will be lower than your marginal rate.

Presenting a net value of RSPs is normal practice (think of it this way - you're comparing this to the value of the matrimonial home - which attracts no taxes, so you need to ensure you're comparing apples to apples), but the rate to use can be contested. In my case it was, and I had to obtain an independent actuarial estimate of what my average tax rate would be at retirement based on the projected balance in the RRSPs.

In the end, this rate falls within a common and reasonable range.
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Old 12-13-2017, 07:26 PM
denbigh denbigh is offline
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what would be the average amount that should be deducted? How can you know what your retirement income would be 20-30 years from now?
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