RCA4U.com
RCA
Retirement Compensation Arrangement 
call 1-800-583-3381
905-426-6011 for assistance or email us

Q&A's What is an RCA How much can I contribute? Does it apply to me ? Can I borrow against the values of my RCA? What does it cost to set up an RCA? How do I get started,? Who is the Trustee ?	Sample illustration of RCA how does it work ? Graphically how the flow of money works Advantages of an RCA? ] How the RCA Works by Michael Berton How the RCA works revised
Sample illustration of fund values in RCAover 15 yrs	Comparison to alternative investment What is an IPP? individual pension plan What is a health spending account?or phsp

What is an RCA?
A supplimental pension plan for owner managers and key employees who have contributed maximum amounts to registered pension plans.
Retirement Compensation Arrangements "RCA" as defined in the Income Tax Act are arrangements which are made outside the registered pension plan system and are intended to "top up" retirement benefits over and above those benefits received from registered plans. With an RCA a trust will receive funds from an employer and make payments after the employees retirement or termination. Since the employer receives a deduction for contributions to the plan, a 50% refundable tax applies to the payments made to the trust which is refunded when the taxable payments are made to the employee.

HOW MUCH CAN I CONTRIBUTE ?

There is no limit that can be contributed to the RCA except that it must be reasonable in the circumstances. There are no actuarial calculations involved. There are no restrictions on the types of investments the RCA makes. Popular investments are tax sheltered life insurance and loans to an operating or investment holding company.
·    An RCA can be a very flexible pension plan for when you retire. Among the benefits are:
- a tax-deductible expense that will reduce tax on company earnings
-a superior  sumplemental pension for the employee or owner
-significant capital for tax deferred re-investment
- assets are excluded from plan holders estate and therefore are exempt from probate tax
-absolute tax savings if employee is in lower tax bracket after retirement when RCA funds are paid out and taxed
- a creditor protected retirement vehicle
-an excellant vehicle to remove trapped cash from corporation and "purify" the shares for capital gains exemption
·     -can be funded via tax-exempt universal life insurance
·    EXTREMELY FLEXIBILE


DOES IT APPLY TO ME ?

The cash flow benefits are dependant upon several variables such as tax rates, investment capital, investment return and timing of the income distribution. In genreal, if you have maxed out your RRSP contribution limit and have investment capital that you wish to defer taxes on then you should seriously consider and RCA



Sample illustrations of how an RCA works

Sample illustration of the growth of an RCA and RTA acct


How much does it cost to set an RCA Up./

It depends but on average around $1500 with an annual trustee fee of around 200 to 500 dollars .
the inital costs are based on having an actuarial calculation and confirmation of eligibility and amount that you may contribute, an independent Accountants opinion and independant legal opinion on the trust agreement .

To get started we sent out an actuary to discuss your individual situation and explain the components of the RCA and where the funds go and when they are available to you . He or she will then  determine if it is a tax saving and also to determine the amount and if the concept is acceptable to all parties . The actuary then meets with your accountant and legal advisor to implement the documentation necessary for Revenue Canada.

You then decide on the investment vehicle  that the investment portion of the RCA goes into , we may suggest products that offer security , tax sheltering and flexiiblility if you are not familiar with the types of investments.

As with any product there is a cost both in the management expense of the investments or if an insurance element is present . So we ask a complete review of the illustrations are done with a outside independent advisor  please call 1-800-583-3381 or 905-509-4678 to have an appointment arranged to meet with you and your advisors .

Borrowing against the value of your RCA and RTA
Most banks will lend up to 90% of the fund value of the RCA acct and the RTA acct subject to normal bank underwriting .  If you require capital for the business operations this loan may be tax deductible and any insurance used to secure the loan the NCPI may be tax deductible up to the loan amount . This is subject to all current applicable tax laws at the time of inception and ongoing , we recommend independent accouinting advice on the tax dedutibility of such loan interest.
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