What is Locked-In Plans?
Locked-in plans are when employers and employees’ vested contributions and interest are transferred into a Registered Retirement Savings Plan until the investor reaches a specific age (anywhere from age 50 to 70) depending on the pension legislation applicable to your plan.
Types of Locked-In Plans
Pre-retirement locked-in plans
Pre-retirement locked-in plans are considered RRSPs for federal income tax purposes. They include Locked-in Retirement Savings Plans (LRSPs), Restricted Locked-in Savings Plans (RLSPs) and Locked-in Retirement Accounts (LIRAs), depending on the applicable legislation. Currently, all LRSPs and RLSPs are subject to federal pension legislation.
Post-retirement locked-in plans
Similar to RRSPs, all pre-retirement locked-in plans must collapse and convert to a maturity option by the end of the year the plan holder turns age 71. The earliest age at which a pre-retirement locked-in plan can convert to a maturity option varies by pension legislation, with some having no age requirement at all. Four types of post-retirement locked-in plans are available.
Benefits of Locked-In Plans:
There are some benefits of Locked-in plans you should know about:
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Insurance can help you recover when things go wrong. From property damage to liability issues related to items like fire or theft, should someone sue or threaten. With proper policies, you will gain peace of mind and feel more comfortable in your new role as an entrepreneur.
Business insurance can be customized to suit your specific business needs. Recommended coverages often depend on the type of business you have and the risk protection your business will need to stay healthy and whole.
Yes, you should include insurance expenses in your initial business plan and annual budget. From a cash flow perspective, you'll want to understand what types of payment options and timings are available.
The cost of insurance is based on several factors such as, the value of the assets of the company you wish to insure, the number of employees, the specific risks associated with your industry, your personal risk tolerance and the amount of liability protection you prefer.
Your agent can suggest a liability coverage that is optimal based on the size and industry of the company. The key is to make sure you have enough coverage in case something goes wrong. To help you make the best decision for your business speak openly with your agent.
Businesses often need to carry more than one type of insurance, and your business's insurance needs can be highly individual. A knowledgeable agent can help you find the right solution.
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