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June 11, 2010 12:20 ET

Five Ideas for the Menu at Crowbush: BMO Retirement Institute

Helping grandparents help finance grandkids' education; giving the Sandwich Generation a break among suggestions

TORONTO, ONTARIO--(Marketwire - June 11, 2010) - The BMO Retirement Institute (TSX:BMO)(NYSE:BMO) has five ideas for finance ministers to consider on the eve of meetings at the Rodd Crowbush Resort in PEI.

  1. Help grandparents help finance their grandkids' education and give the Sandwich Generation a break.
    • Allow tax-free transfers to the Registered Education Savings Plan (RESP) from RRSPs and RRIFs.

  2. Help Canadians continue to save for their retirement past age 71. 
    • At the end of the year when Canadians turn 71, they must stop making Registered Retirement Savings Plan (RRSP) contributions, and begin to deplete their savings by converting them into Registered Retirement Income Funds (RRIFs) or annuities. As Canadians live longer, they should be able to continue contributing to their RRSP beyond age 71 and convert to RRIFs and annuities later. According to BMO Capital Markets Economics, despite modest short-term costs, such changes could be revenue neutral in the long run.

  3. Help seniors save for long-term care, which can run as high as $60,000 a year.
    • Create a new "Registered Medical Savings Plan" for long-term healthcare, with tax free transfers from RRSPs and RRIFs to such a plan.

  4. Tax RRIF income more fairly; don't tax RRIF payouts at employment income rates.
    • Only the contributions to the plan should be taxed as employment income; the rest, since they include capital gains and dividend income, should be taxed as if they were held outside a registered plan.

  5. Provincial and territorial finance ministers should join Minister Flaherty, who established the Task Force on Financial Literacy, to draw attention to the need for a high level of financial literacy among Canadians. 

About the BMO Retirement Institute

The BMO Retirement Institute was established in 2008 to provide thought-provoking insight and financial strategies for individuals planning for, or currently in, their retirement years. Tina Di Vito is Head, BMO Retirement Institute. Tina is a Chartered Accountant, Certified Financial Planner and Trust and Estate Practitioner. Visit the BMO Retirement Institute at www.bmo.com/retirementinstitute.

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