Mark and Jessica are married. Mark earns $82,000 per year and is a member of a defined benefit pension plan for the past 10 years. He expects to derive a pension income of approximately $40,000 per year when he retires. After taking years off to raise the kids, Jessica recently started an unincorporated small business and earns $30,000 per year. This year, after paying all of their personal expenses, Mark has $5,000 in excess cash that he does not need in the near future. Mark has RRSP balance of $20,000 and RRSP contribution room of $6,000 & Jessica has RRSP balance of $21,000 and RRSP contribution room of $8,000. Their main concern in ensuring that they have maximize their after -tax income in retirement and be as tax efficient as possible now. To address these concerns, the best alternative for Mark is that he should:

Identify the correct answer. For each answer, explain why it is either incorrect or correct. (5 marks)

1. Contribute $5,000 to Mark's RRSP
2. Contribute $5,000 to a spousal RRSP in Jessica's name
3. Contribute $5,000 to a TFSA in Mark's name
4. Give $5,000 to Jessica so she can invest in her RRSP

Answer rating: 100% (QA)

A Contribute 5000 to Marks RRSP Generally speaking you should aim to contribute at least 10 of your ... View the full answer