This week, a 65-year-old trades person came in to have his taxes completed. He works out of province on a seasonal basis and collects EI during his off season. He also withdrew $14,000 from his RSP account at the bank.

So, where’s the error?

If he had changed his RSP to a RIF (Retirement Income Fund) and then made the withdrawal from the RIF, the tax saving would have been $1,400.

No offense to their advisor from the bank, but if they had switched the account (with one signature), the tax payer would have an extra $1,400 in their pocket.

Ironically, the client went straight to their bank and complained. The banker then phoned us upset that we had inferred an error on his part… which in fact, it was. The banker’s comment was, “How could I possibly know to do this… I’m not a tax expert”, to which Chris responded, “I know…but in the end, the client still lost $1,400…”