Optimize Retirement Wealth: Mastering Passive Income Rules & Pension Planning

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okay uh I think we can begin here Andrea and Roy um I just wanted to thank everyone for joining us today and um I

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just have a quick introduction and then I'm GNA hand it off to Roy and Andrea your resident experts on today's webinar

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so allow me to please introduce myself my name is Taylor Curran and I'm the senior coordinator of member engagement here at the CH Board of Trade I would

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like to thank you all for joining us this morning for our value membered Workshop hosted by retirement compensation funding today's topic is

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going to be focused on optimize retirement wealth mastering passive income rules and pension planning before

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we begin I would like to acknowledge this land that we are meeting on which is home to diverse First Nations Inuit

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and mate people though you could be watching from watching or joining us from anywhere please note that the

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board's offices are located on the traditional territory of many indigenous Nations they share with they share with

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us a sense of responsibility for intergenerational Equity the well-being of today and tomorrow if you do have

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questions throughout the webinar please put them in the chat and we we will be sure to address those at the end of the

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presentation and without further Ado I would love to pass it over to Andrea and

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Roy good morning uh my name is Ray C I'm the uh founder and executive partner of

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uh retirement compensation funding uh we have almost 100 people signed up for

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this webinar today uh and for those that uh are uh getting in later uh it is

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being record it and uh the board you will have access to that through the uh

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uh Board of Trade for over 35 years our company uh has been working with public

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corporations and with uh to to fund uh or secure uh their pension promises and

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for private corporations uh to uh help them uh and pension and equity and set

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money aside for retirement two things stand out uh to us

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over uh the this uh 35 years

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slide what uh what we've discovered that most private corporations have in

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common uh is that they do want to set aside some of their annual profits for

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people in the in the company that help earn them family members

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uh but the biggest problem they have uh is how to do this tax effectively and

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they cannot do that by themselves they need professionals to help them uh Set

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uh this up properly I'd like to introduce Andrea letner who is our managing partner and she will uh uh

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introduce us to the uh agenda for this morning's seminar Andrea over to

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you hello everyone thank you for joining us today and

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welcome so let's talk about our agenda our first slide our next slide sorry is

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pension and equity and we feel that pension and Equity stands as a pressing issue that demands our attention and

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scrutiny today's realities paints a vivid picture of p the pension landscape

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fraught with imbalances prompting us to question the root causes and seek viable

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Solutions the lens through which we examine our topic today widens as we

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explore the impact of corporate taxes on pension structures as well we're going to look

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at the Canadian income tax act and how it emerges as a focal point in our

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pursuit of Equitable pension structures and to ground our exploration

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today in practicality a case study will illuminate real world scenarios where

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pension in equity has tangible consequences moving forward encourages

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participants to get in touch with us and in traversing these agenda points we embarked on a journey today to

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unravel the complexities of pension

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inequity so here we have an example the twins to demonstrate the

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concept of pension inequity we have the twins Mr public sector executive and Mr

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private sector business owner in the realm of retirement security the

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contrast between a public sector employee and a private sector business

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owner reveals a stark disparity underscoring the financial challenges

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faced by individuals in different professional spheres so here are our twins in

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retirement so let's examine the pensions of the twins Mr public sector employee

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retires with a pension of 321,000 ,000 and Mr private sector business owner

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with a pension of 104,000 it's obvious there is a

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considerable shortfall 216,000 between the two prompting a

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closer look at the factors contributing to this marked difference in our example Mr public

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sector enjoys a robust pension of $321,000 this pension represents a

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financial safety net that reflects years of service within a structured

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system on the other hand Mr private sector business owners pension of

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104,000 underscores the challenges faced by entrepreneurs and those in the

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private business realm the significant shortfall of $216,000 between those two pensions

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demonstrates the broader pension inequities that exist today I will now pass the presentation

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over to Roy to discuss today's

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realities now to understand uh what it the tax realities are

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today uh we have to go back uh let's go back to the year 2000 uh in 2000 the

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small business rate in Canada was $200,000 and what happened was that for

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every dollar of profits over $200,000 there was a higher rate of tax

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paid uh but it was retroactive to to the first dollar so what was happening in

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the year 2000 was that many business owners were being forced to pay

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themselves bonuses that they did not otherwise want to take and pay personal

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tax on it and it was the year 2000 uh that what we're talking about today uh

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uh became part of uh the uh the landscape for small private corporations

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in a strategic Alliance we had with Canada Life and we were able to help small businesses hundreds of across the

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countries uh with their problem now fast forward to today uh the small business

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rate is $500,000 and if you have a pro a dollar

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of profit over the $500,000 you pay the higher rate of tax but it is not retroactive to the first

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dollar so what this has done it has opened up uh small business uh to make it much

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easier to expand the business and to build the business and on paper uh it

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looks like it's much easier for an owner uh to set aside money uh for themselves

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but what appears on paper is not necessarily what happens in the end

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slide now let's look at this a little bit closer uh when it comes to setting money aside for

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retirement private business owners they really uh have the same uh options as an

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employee would have uh whether it's a money purchase pension plan which is the company equivalent of an RSP or if they

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set up an individual defined benefit pension plan but all these plans have contribution Caps or benefit uh caps and

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for many small businesses you know having to sell uh part of the operating company at some point in time to have

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for funds for retirement is not an option now let's look at the small business tax the the the the pro of it

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is that the small business tax on the first $500,000 of income is only 12 and

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a half per. so an owner could easily think well that's not bad because I can

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make uh up to $500,000 pay 125% tax and set some of

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this money aside uh for myself down the

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road but the government really doesn't want you to do that uh and they show

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that initially uh the first con is the investment income tax because the

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ccpc uh they pay investment income tax of 50.1

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7% uh versus 26 .5% in a non uh C CPC so

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basically what the government is saying to you is okay fine uh we'll let you pay 12.5% on the first $500,000 of earnings

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but if you're going to send if you're if you're not going to reinvest that money back into the business and try to set

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some aside for yourself we're going to ding you with a higher investment income tax now added to that are the new rules

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that came in in 2019 uh called the passive investment tax rules now next

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slide now let's look at these uh new rules uh briefly um they're based on

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what's referred to is your adjusted aggregate investment income and you can see uh with what the

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Minister of Finance said in 2017 uh which underlined what I just

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said to before about the higher investment tax rate the government does

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does not want you to be setting aside uh any of the profits up to the

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first $500,000 for yourself they want those profits invested back into the company

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and their remedy for the passive investment income uh was that for every

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dollar that your passive investment income exceeded 50,000 they're going to grind down the small business rate by $5

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now I can tell you this is punitive and we will show you that a little bit more

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now next slide in addition to the passive investment rules those of us in

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the pension business and and and many investment advisers who happen to be on the on the um on the seminar there's two

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other things that we worry about we worry about the investment tax rates and and the mitigation of them and also we

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worry about the 21-year tax rule uh for family trusts uh because many wealthy uh

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private corporations uh the operating company is owned by a family holding company and the family holding company

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as well uh is owned by a Family Trust so let's look at these three taxes a little

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bit more closely as they impact uh retirement uh saving now the

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pass investment rules this is a complicated tax it's a moving point in

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time and at its worst depending upon the the province that you that you reside in

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uh the the tax reality is you could end up paying $120 in tax for every dollar of

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investment income over $50,000 which as I said before is

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punitive now what happens with this uh passive investment tax it's a moving

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point in time and every company is going to have their crossover point so what is

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happening now is the accounting firms and investment advisors are having to

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help their clients mitigate this tax uh there are ways that it can be done uh

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but the eye has to be kept on the ball uh because otherwise what happens is a

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company ends up having uh investment earnings over the $50,000 that they were not expecting

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next slide now the price of the small

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business tax deduction as I indicated to you before was a 50.7% investment in tax versus

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26.1% now investment visors will find ways and there are ways that you can try

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to avoid this tax by using tax deferral and that could be corporate class mutual funds the use of corporate own life

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insurance uh deferred uh some Investments where

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the the the money that is paid out is deferred uh but somewhere down the road

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it's going to catch up when money comes out and you could appreciate from from our perspective and anybody in looking

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at building up portfolio wealth but the difference in the tax of 26 versus 50%

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is quite significant now one of the other concerns uh that is creeping in

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there now is that some of the more uh sophisticated uh estate planners and

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accountants have tried to help their clients get around this 50.7% investment income tax by setting

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up other arrangements investment holding companies uh that basically the uh the

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money that's been set aside for long term can be taxed at a lower rate but in the past couple of budgets CRA is

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implementing uh Provisions that will allow them to deem uh some of these arrangements as ccpcs

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so that's one of the concerns that has to be uh looked at next

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slide now this is one of the Hidden taxes that a lot of people

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forget um it's on my mind because I started off my career at Royal trust and was in the trust department but family

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trusts are deemed to have disposed of their assets every 21 years now when you

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think about this a little bit uh the money that we want to set aside for

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ourselves and for our family that money is going to be used

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over quite a long period of time I mean uh an an owner who's 50 years of age

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right now uh could live to 90 so the money that is being set aside uh could

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go uh could be used over a period of 40 years if you add children into it it

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could be over a period of 60 years so what can happen is that the exposure on

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the pool of assets uh that is held in a holding

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company impacts the value uh of the the Family Trust And so

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what can happen down the road is money that you might otherwise have wanted to set

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aside uh to pay other people ends up having to be go up to the family TR

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press to to pay the 21-year tax next

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slide so what does this all mean well there's lots of potential tax liability

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now I underlined the the word potential because uh we have a lot of uh smart accountants and smart investment people

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who are going to try to help you mitigate these uh these liabilities but

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they have to keep their eye on the ball now you cannot blame a business owner

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for thinking that the government is out to get you but it's not quite as bad as

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that because there is a provision in the income tax act that can basically wipe

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these three taxes right off the table for part of your profits and I'm going

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to turn it over to Andrea now uh to tell you what that is

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Andrea thank you Roy who doesn't love to talk about the income tax act

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well the good news is there is a meaningful solution to part of the pension inequity problem in the Canadian

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income tax act within the income tax act we have found a solution and it's called a

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retirement compensation Arrangement it has been in the income tax act since 1986 and it was RCF

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working with a major accounting firm that established the first RCA in Canada

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for a public corporation an interesting statistic over 90% of

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public corporations with defined benefit plans now use rcas to either secure or

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fund pension shortfalls private corporations can also use rcas to address the pension inequity

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we see with the twins the RCF products Focus primarily

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on family group supplemental pension plans utilizing rcas

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under Section 22481 sorry of the income tax act the

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term RCA refers to a retirement compensation Arrangement an RCA is a

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specialized form of arrangement established by employers to provide retirement benefits to

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employees unlike traditional pension plans rcas are subject to Unique tax

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rules as outlined in the Canadian income tax act some of the key features are

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employer establishment I just talked about they're established and maintained by employers to fund retirement benefits

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for their employees I.E family members funding and contributions

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employers contribute the funds to the RCA on behalf of the employees unlike other pension products there are no caps

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if the entitlement guidelines are followed these contributions are based on a predetermined formula and are

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intended to fund retirement benefits let's talk about how n RCA

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Works contributions money is divided into two accounts and split

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5050 the RC AIA is held by a corporate trustee the RTA account is held in a

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special division of the CRA all the money comes back to the plan members in the form of benefit

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payments so here we have a Graphic with three

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circles we call that contributions in hitting the sweet spot in the middle

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some of the benefits of an RCA include no limitations on Final T4 average earnings no constraints on corporate tax

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deduction if entitlement calculations are followed and unlimited potential for

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retirement income additional

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advantages well the trust is credit or protected no matter what happens down the road the RCA trust is also exempt

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from the 21-year vesting rules that typically apply to trusts RCA are also exempt from the

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rules regarding the safe income test for intercorporate transfers RCA contributions for past

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service can be financed potentially leading to a reduction in retainer

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and any unused contributions can be carried forward RCA's diminish passive

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investment income for corporations alleviating the impact of the decrease in the small business limit from

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$500,000 and potentially mitigating concerns about incurring a higher general tax

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rate Roy would you please take us through the case study thank you

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Andrea now this case study is based upon an

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actual uh family group RCA that we have in the office and the full case study is

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available for those that uh would like it it includes all of the uh uh entitlement calculations and the funding

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calculations and the RCA ledgers what I've done today is just take out uh a

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few of the slides uh to to basically show uh the significance of what this

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does for family corporations now in this case here we have a dad and two children uh that are

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in the business now what's important to understand is that these family members

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and they're working in the company but they do not own any shares of the company and this is important for people

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to get their minds around because the operating the shares of the operating company are owned by a family holding

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company and the family holding company is in turn owned by a Family

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Trust now you can see here that the the base salaries of the uh of dad and and and

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the Son and the daughter are basically just sufficient to cover whatever they

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need to to run their uh their life on a day-to-day

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basis any additional share of the the profits that they might be entitled to

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the only way that those profits can come out to these individuals would be by a

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taxable bonus but we know what happens to taxable bonuses they are subject to the

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top marginal tax rates for that individual so what we have set up for

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this family here becomes particularly significant now dad is 60 and he likes

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working and he is going to extend his retirement to 70 uh he wants to give the children another five years of getting

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some expertise before they take over for him the two children uh they're they've

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indicated they want to retire at 60 because they hope to have their children in the business and they want to be able

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to pass the uh the the torch a little bit um sooner Now understand that if we

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had not not set this up the benefits I'm about to show you

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that go to the dad and the Son and the daughter would not go to them what would

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happen is the corporation would pay would pay the tax and the money would

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then go by dividend up to the holding company now in the holding company dad's

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only entitlement is equal to the preferred shares that he would have taken back uh when the State freeze was

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done and the value of those preferred shares is probably lower than what they

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really worth because the accountants would try to get CRA to accept the low valuation the children the only way that

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they would access any of this money is if it goes from the holding company to

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the Family Trust but guess what uh there is one child that's not in the business

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and these two children aren't the only beneficiaries of the Family Trust so let me show you now the significance of this

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to the to the son the founder the Son and the daughter let's look at dad first now his normal life expectancy is

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to 84 so you can see here what we've done with this RSP we've just uh uh as an

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offset we've just assumed that the RSP is more or less paid out in anity format

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uh and spread uh out over the years they have you have there's other way ways that you can take uh

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rsps uh but this is just to show what it would be over a long period of time now look what the RCA is

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providing uh this is 194,000 starting at 194,000 so for for the from what the day

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he retires at age 70 to his normal life expecting he's going to pick up $3.3

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million that he would not otherwise pick up now Dad could live longer next

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sline uh today uh once you're over 60 uh longevity benefits start kicking in and

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we have clients right now uh rcas that we set up many many years ago uh that

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are now still alive over the original life expectancy that that we projected

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so if Dad lives to 90 for example there's another 1.3 million now dad also

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has a spous so what happens is uh dad lives to 90

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his spous could live to to to 94 and so there's an extra $1.6 million there so

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what this is what does is add up to the RCA can pay dad an extra $6.3

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million and this is money that he would NE otherwise not get he's got two

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choices either it's paid to him by way of a bonus he pays High personal tax uh

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he or he sets up the RCA otherwise if the money goes into the holding company

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all he's going to get out of it is uh is is preferred share Redemption now let's

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look at the sun now the son over his life expectancy

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can pick up $6 million now think about this for the son he's working hard in the business the last thing in the world

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he wants to do is to get a bonus today that he has to pay tax of 50% on or a

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high marginal rate but if he doesn't if this is not done for him this

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money he might never see it because uh what would happen is that the underlying

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value would go to the holding company and initially that money is going to go to redeem his dad's preferred shares and

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then what's left over is going to go up to the uh up to the Family Trust now the

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son also has a spouse so between the Son and the spouse

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and Longevity benefits all of a sudden there's $9.5 million of

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benefits uh that can fly into the that go into the son's hands now let's look

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at the daughter the daughter I mean we she's

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married but we can't illustrate survivor benefits for her husband they're there and the reason why we can't illustrate

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them is because uh women live longer than men uh but the total amount of

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cash uh that's there for the daughter is $10 million so what does that what does add

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this up in total so between the three of them uh they and the third generation

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benefit and let me tell you about the third generation benefit in this particular uh family group RCA the dad

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had a concern he was concerned because his children were young he was concerned

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as to what would happen if the children died prior to normal retirement and so

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what we did in this RCA is that there's a provision uh that if a child dies uh

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before normal retirement they are deemed to have retired but the problem for the RCA is

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funding that so with the son and daughter uh their funding was with uh

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one of the insurance companies and as part of that funding If the child died

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prior to uh normal uh retirement uh the insurance company would kick back in

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money to cover the survivor benefits uh in this case that we've had them all

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living to a long time so the money is still coming back in and that can be used for the third

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generation uh that will be coming along after the children so so in total uh

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what we've done is that this uh We've managed to to basically carve out $33

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million of benefits to these working family members uh that are generating

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the profits and they are going to be piding directly to them and to their

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spouses and and to their to the third generation and they are bypassing the

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holding company and they are bypassing the Family Trust now what does this

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cost now here's where it gets rather interesting let's look at the individual

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funding for each of the three members we can see that for Dad until his

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retirement it's $387,000 a year and for the son it's 215

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and for the daughter 213 now in actual fact in this company this represents

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actually not a bad distribution of the profits uh that they

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are making if they were going to be Distributing them uh to the family but

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you can understand that the last thing in the world that the family wants is to

30:35

get the dad doesn't want a bonus of $387,000 uh because that could uh he'd

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have to pay a high marginal tax rate on that so what we've been able to do here

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is we've been able to set aside a fair amount of money now just one cautionary

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uh Tale here a company cannot just decide oh we have a million dollars

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worth of profits this year and we want to allocate them among family members

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let's just put them into an RCA so they don't have to pay the personal tax on it CRA can come back and deem that an RCA

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is a salary deferral Arrangement so what happens uh is that you have to set it up

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as a retirement compensation Arrangement and you have to follow the funding

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guidelines uh because an RCA cannot take all of a company's profits It could only

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take the portion of the company's profits that relate to the individual

31:43

entitlements under the CRA formulas so in this situation here what we've been

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able to do is the company can divert $14 million of profits into the RCA the net

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cost to the company is $10 million now let's look at the tax savings on

32:01

this now this is an approximate uh

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presentation because what we do is for every case we that we put together

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we uh provide the accountant uh a schedule that says okay

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if this money didn't go into the RCA and went in uh they paid the tax on

32:27

it and it went in the holding company what would it look like down the

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road uh as to the taxes that would impact that now this assumes that the

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money that goes in is all free and clear there could be other uh tax losses and

32:45

carry forwards that we're not aware of but it acts as a guideline and what we find is uh that the tax savings uh run

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from 50% to in this case here 73% now the reason why this one is so high uh is

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that they're saving corporate tax of 3.8 million they're saving investment income tax of 2.1 million uh they're re saving

33:10

the grind down tax of the passive investment of 325 but this company here uh because of

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the fact that they don't have any big liabilities uh in the uh the holding

33:22

company uh that their exposure to 21-year tax is quite substantial there's

33:27

under $4.3 million so there's a lot of tax that can be saved over to you

33:36

Andrea hi so I'm going to talk to you about a corporate trustee uh just give you a brief

33:44

explanation of what they are and how they function so a corporate trusty is a financial institution and they're

33:49

appointed to oversee and manage trust assets on behalf of businesses to

33:55

fulfill fiduciary responsibility ilities ensuring the proper Administration and

34:00

execution of a trust according to its terms and relevant legal

34:08

requirements so how do clients benefit from a corporate trustee well safety all

34:14

RCA investment accounts are held in the name of the trustee for the benefit of the plan members as per the planed

34:22

document arms length the C ra knows the generally

34:28

accepted guidelines are followed with no overfunding continuity a corporate

34:33

trustee cannot die or become disabled they are there for the entirety of the RCA which can go on for

34:41

decades experience family or corporate circumstances can change a corporate

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trustee has the relationship with both the CRA and the RCA provider retirement

34:54

compensation funding to provide Solutions Administration a corporate

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trustee has the systems to ensure that monthly payments reach the plan member

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provide indexing as per the plan document and ensure that all required

35:12

tax filings are complete last but not least relationship over time the trustee

35:19

builds family knowledge to assist through Family Life

35:25

events RCA benefits to a family well assets are exempt from the estate and

35:32

not subject to probate tax rewards the next generation of Working Families for their contribution

35:40

to corporate growth can also include key non-family member

35:45

employees spousal benefits can be directly paid from the trust without

35:51

affecting the estate leav the remaining funding for succeeding generation of working family

36:00

members and if pension plus funding is using is utilized sorry it offers

36:05

longevity benefits at no extra funding cost what are the business

36:12

benefits well rcas offer an exemption from the safe income test rules for

36:18

intercorporate transfers to a holding company they provide flexible funding

36:23

options for past service allowing the carry forward of UN made contributions funds held in an RCA are

36:31

creditor protected and the stre sorry the Strategic funding allocation prioritizes

36:38

the benefit of the next generation of working family members what are the tax

36:45

benefits well you get to channel pre-tax corporate earnings into a creditor

36:51

protected pension exempt from the 21-year vesting Rule and decreases the

36:56

assessed 21-year tax for companies owned by Family trusts our saves are ideal for those

37:03

qualifying for the small business tax rate and helps to diminish the corporate

37:09

passive investment income for eligible firms RCA alleviate the risk of

37:15

reduction in the small business limit from $500,000 an RCA supplemental pension

37:22

also has the potential to generate significant tax savings for companies

37:27

subject to the general rate of 26% they also provide a safeguard

37:34

against future potential corporate tax increases or

37:39

modifications corporate contributed funds are tax deductible and

37:45

contributions remain tax deductible for plan members until benefits are accessed

37:50

in retirement so here's our key points in

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summary RCF supplemental pension projects they are the solution

38:03

addressing the prevalent issue of pension inequity between public and private sectors RCF offers Innovative products

38:12

that stand out and potentially eliminate caps on both corporate contributions and

38:18

plan member benefits one of the key advantages of the RCF supplemental pension products is

38:25

their unique approach to corporate contributions and plan member benefits

38:31

unlike traditional pension plans our Solutions don't impose any caps again as

38:37

long as entitlement calculations are followed ensuring that both corporations

38:42

and plan members can maximize their financial benefits without

38:48

constraints furthermore RCF supplemental pension products aren't just a pension

38:53

plan our products are strategic iic Financial tools for businesses by leveraging our innovative

39:01

solutions corporations can unlock substantial tax savings the potential for significant corporate tax benefits

39:08

adds a layer of financial efficiency making the RCF supplemental pension

39:13

products a smart choice for businesses aiming to optimize their financial

39:20

resources in summary the RCF supplemental pension products are a game changer

39:27

in the pension landscape addressing inequity concerns and providing unmatched

39:33

flexibility it's a powerful Financial tool that aligns with the dynamic needs

39:38

of modern businesses please don't hesitate to

39:44

reach out to us if you need more details thank you very much for participating in today's webinar and we look forward to

39:51

contacting you in the future one last comment I appreciate you

39:58

those of you who have attended the U the the seminar today uh we have hundreds of

40:05

rcas uh established um in fact the first RCA we established back in 1988 1988 is

40:12

still in pay so we do know that what we offer uh uh can be of tremendous

40:19

advantage to many companies uh we work closely with your accountants and with your lawyers and with your uh uh

40:26

financial advisers uh and we look forward to helping anybody that uh requires help uh

40:34

I'm turning it over now back to Taylor uh there might be some questions that have come in or anybody that has a

40:41

question uh can ask it now thank you very much awesome well thank you Roy and

40:46

Andrea it was an amazing presentation um just a couple of housekeeping items before we get to the questions this

40:51

session is going to be is recorded and you will have access to the slides um Roy and Andrea will take care of sending

40:57

that out to those of you that are interested in having those um she has your contact information Andrea does so

41:03

she'll take care of doing that and this session will be uploaded on the board of Trades YouTube website so I will be sure

41:08

to share that link with Andrea to share with all of you as well if you're interested in watching it again um we

41:14

did have a couple of questions that came through the chat so to either Andrea or Roy um the first question that came in

41:20

is what happens if a family leaves the company do you want to address that Andrea

41:27

uh or do you want yeah you go ahead what was the question again Tanner what

41:33

happens if a family member leaves the company well that's a good question and and and we have had that happen uh many

41:41

times um when family members uh decide they don't want to continue working uh in the company anymore what normally

41:48

happens uh is that the the the funding that's in there for that family member

41:55

um uh what it will do is that we we we recalculate an RCA should be updated

42:02

every three years in other words the the entitlement calculations and the funding calculations and so what happens is that

42:08

if there's money in the RCA that was allocated to a family member who's no longer there that gets reallocated to

42:16

other family members and what it does is is it reduces the contributions uh going

42:21

forward to uh support the the family members that are still in the business

42:28

uh great thank you we did have another one come through the chat uh can an RCA be established if the founder is over

42:34

the age of 71 what was that with game Taylor can an

42:40

RCA be established if the founder is over the age of 71 uh yes it can um as

42:46

long as you're uh I'm a good example of that uh as long as you're working in the

42:53

company uh an RCA can be established for you and uh we have actually quite a few

43:00

rcas uh that we established uh where the um the

43:05

owners uh are are over 71 and one of the significant uh things about this is that

43:12

we have companies uh that all of a sudden uh the

43:19

time has come to pass the wand so to speak some companies uh have children

43:24

they can pass the wand to but other companies uh they don't uh so so that

43:30

the wand has to be passed to maybe employees now the real advantage of the

43:36

RCA uh is that Dad could be say 75 years of age he's had 35 years of service with

43:43

the company he's entitled to a 70% pension uh based upon his average say

43:51

last three or five years earnings uh up to 75 what he has not lost is all his past

43:58

service so that what could happen uh for these older people is the company can

44:04

set up a an RCA for that at age 75 uh if the company has enough funds uh

44:13

they can they can lump some funded because all this past Services earned uh

44:18

if they do lump some funded as Andrea mentioned before that might carve up part of the the the retained earnings

44:26

uh it might require uh the company to to borrow uh some money from the bank but

44:32

what's going to happen is the dad is going to get his funded pension and then the wand can be transferred to whoever

44:40

is going to uh take over the company uh on terms that are acceptable to them and

44:47

uh if there is bank borrowings or retained earnings used uh they get replaced uh over time with uh future

44:54

earnings so the the RCA becomes a very viable tool for uh succession planning

45:01

uh for older people awesome thank you Roy sorry one

45:07

more question here what happens if the business cannot allocate funds to the RCA for a few months or even a year

45:14

Andrea why don't you handle that so if if a company has to pause

45:21

their RCA contributions they are able to do that uh they can make those up in

45:27

future years or they can borrow in future years to um meet those funding

45:33

requirements down the road well that's all the questions we

45:39

have in the chat here thank you Taylor I just like to thank all of you

45:45

that attended and uh and joined us today thank you behalf of uh RCF and the traa Board of Trade for attending today's

45:51

webinar Roy and Andrea um thank you both for your presentation it was amazing you have any final words for our attendees

45:58

today uh thank you very much for everyone who attended um please feel free to contact us if you have any

46:04

questions we'd be glad to hear from you and for those that uh that didn't able

46:10

to that registered but didn't attend uh hopefully you'll be able to pick up the seminar through the board of Trades

46:15

website thank you thanks everybody have a great day