Retirement Allowance Eligible Amount clarification

[dynamicdiva]

Can someone please explain the following in layman's terms

taken from CRA website Business section: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... r-eng.html

"The amount that is eligible for transfer under section 60(j.1) of the Income Tax Act is limited to:
$1,500 for each year or part of a year before 1989 of that employment in which none of your contributions to the RPP or deferred profit sharing plan (DPSP) were vested in the employee's name when you paid the retiring allowance. To determine the equivalent number of years of vesting, refer to the terms of the particular plan. The number can be a fraction."

taken from CRA website Individual section: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... l-eng.html

"The eligible part is:
You can also transfer an additional $1,500 for each year or part of year of service before 1989 in which you had earned no pension or DPSP benefit from employer contributions that either vested in you at the time of payment or that were previously paid to you."

1) When they say "vested" do they mean actually paid out to the employee, in other words the employee received pension payments or just that the contributions became truly "owned" by the employee?

2) Would this be up to the companies pension plan administrator to calculate? IE: how would an employee know how many years of pension contributions were vested to them prior to 1989?

Thanks so much for your help

[brucecohen]

The retiring allowance amount is calculated by your employer, not the pension plan administrator. "Vested" means when the contributions become owned by the employee. Before a wave of pension reform in the mid-80s, vesting typically required age-45 and 10 years of service. In most jurisdictions pension reform then reduced that to 2 years of service or plan membership with no age threshold. While your employer might maintain two vesting dates, for pre- and post-reform service, most simply put everything under the newer rule.

Note: Many employers put a worker into their DB pension plan only after he/she completed one year of service. If pension credit was not subsequently granted for that year, it qualifies for the extra $1,500 allowance rollover.

[BRIAN5000]

For what ever reason I get $2000 a year for every year before 1996 Plus In addition $1500 a year prior to 1989 that I was not vested.

21 years * $2000 = $42,000
Years prior to 1989 not vested "0"

[BRIAN5000]

For what ever reason I get $2000 a year for every year before 1996 Plus In addition $1500 a year prior to 1989 that I was not vested.

21 years * $2000 = $42,000
Years prior to 1989 not vested "0"

Got a different person when I called the Company transition center today and after they have checked into it they have allowed another $1500 for the prior 1989 years not vested.