Whether it’s be-cause of the recent market turmoil or in spite of it, you need to be on top of your game as an advisor heading into this RRSP season. That’s because there have been some significant changes to the retirement-planning landscape.

Here is an overview of what you will need to know this year:

> Tax-Free Savings Account. Clients from a wide range of backgrounds will want to hear more about the new tax-free savings account.

“We think this is going to become a very important part of a client’s short- and long-term financial planning,” says David Ablett, director of tax and retirement planning with Investors Group Inc. in Winnipeg.

The TFSA is almost a mirror image of the RRSP, Ablett says. Unlike RRSP contributions, money deposited into a TFSA is not tax-deductible, but investment income earned in a TFSA will never be taxed, even when it is withdrawn.

In addition, TFSAs don’t have withdrawal requirements as RRSPs do. Says Ablett: “You can keep it going until the day you die.”

Another significant difference is that while both plans allow clients to carry forward unused contribution room to future years, the TFSA allows clients to accumulate the contribution room created by withdrawals.

“That’s really important because with an RRSP, you lose that space,” says Robin Banerjee, policy analyst with the C.D. Howe Institute in Toronto, one of the early proponents of introducing an uncomplicated savings vehicle to Canadians.

Regardless of the client’s personal income, every adult Canadian earns $5,000 of TFSA contribution room every year, starting in 2009. And, according to Barbara Amsden, director of strategy and research with the Investment Funds Institute of Canada in Toronto, the TFSA is the first such investment vehicle that will be virtually paperless, come tax time.

“There won’t be tax slips or forms,” she says. Financial intermediaries will file electronic information with the government.

What’s next: IFIC has sent a letter to all the provincial governments, asking that they extend their beneficiary rules to allow TFSAs to roll over to a beneficiary outside of a will, in the same manner as other retirement savings plans or income funds do. A beneficiary designation is particularly important for the self-employed (who lack employer pension plans that dictate such designations), Amsden says, as well as for the young, lower-income or new Canadians, who are less likely to have wills.

> Lifetime Benefit Trust. Pro-posals for a vehicle that helps a client’s adult children who are dependent due to mental or physical infirmity avoid a tax hit have been around for some time. A lifetime benefit trust will allow a trustee to take RRSP or RRIF proceeds to purchase a qualifying trust annuity for the exclusive benefit of the medi-cally dependent child. (See “Vehicle helps parents,” page B14.)

Rather than pay taxes on the lump sum, the child would pay taxes on the annuity payments generated by the trust, says Ablett. The LBT hadn’t been passed formally into legislation at press time, but industry insiders are confident the legislation will pass because all major political parties are in favour of the plan. The LBT will probably be retroactive to 2004, Ablett says.

What’s next: Once the LBT is passed into law, advisors can help their clients devise tax-efficient strategies to protect mentally or physically infirm family members. With an LBT in place, sponsors will be able to ensure that the child is not forced to pay taxes on the entire value of the RRSP or RRIF.

> Creditor Protection. Any client who filed for bankruptcy after July 7 should be aware that most of their RRSP and RRIF assets are protected from creditors, thanks to a change made to the federal Bankruptcy and Insolvency Act. (See page B10.)

Creditor protection legislation is already on the books in several provinces, some of which go further than the new federal amendment. But the federal plan addresses those provinces that had nothing on the books to protect RRSP and RRIF savings from the reach of creditors. For instance, before this change, Ontario legislation dictated that RRSP and RRIF assets were safe from creditors only when a bankrupt planholder died. The new rules offer protection from creditors, with some restrictions.

There are also a few measures to ensure the plan is not abused. For instance, any contributions made in the 12 months leading up to the declaration of bankruptcy are exempt from this protection. That ensures no one tries to beat the system, Ablett says, by socking as much as possible into their RRSPs before entering bankruptcy.

@page_break@> Changes To Contribution Limits And RRIF Dates. The RRSP dollar limit for 2008 is $20,000 and climbs to $21,000 for 2009. But the 18.5% of income limit still stands.

“We’re almost to the point,” says Ablett, “at which the government will finally start indexing the dollar limit to inflation.”

Meanwhile, in 2007, the RRSP maturity date was changed to 71 years of age from 69. Because this legislation changed in the middle of the year, some individuals had switched their plans under the belief that they had to because they were 69 years old. Advisors need to confirm whether clients born in 1937 fall into this group because there is a special provision for them if they made the switch earlier than now required. These individuals are allowed to flip their RRIF payouts back into a RRIF or an RRSP. says Ablett, so they don’t count as income.

What’s next: Several lobby groups want to see the RRIF withdrawal rates lowered or scrapped altogether. The C.D. Howe Institute published a paper this year, arguing that the idea of a minimum annual withdrawal rate makes little sense when life expectancy is up and returns on investments are down. (See “Mandatory withdrawals unavoidable,” page B12.)

“[Mandatory withdrawal] can force people to cash out their pensions in markets during which it’s not optimal for them to do so,” says Banerjee. “It also increases the chances that they won’t have enough money in registered accounts.”

Susan Eng, vice president of advocacy with the Canadian Asso-ciation of Retired Persons in Toronto, agrees. The government should stop forcing Canadians to roll their RRSPs into RRIFs altogether, she says: “People are living longer, and they want to manage their own money in the manner that suits their own lifestyle.”

> Phased Retirement. Up until now, Canadians holding federal defined-benefit pension plans were discouraged from continuing to work part-time after age 60 (or, in some cases, 55) because they couldn’t receive any of their benefits while working.

“You were either in the plan or totally out,” says Ablett.

New legislation allows individuals to work and receive as much as 60% of their benefits while accruing additional benefits. (See “Governments make it easier,” page B6.) Employers will have to amend their plans to allow individuals to take this route.

Advisors need to explain to their clients, however, that this legislation addresses only those with federal pension plans. For provincial plans, Quebec and Alberta are the only provinces that allow phased retirement so far, with British Columbia expected to come aboard in several months.

“None of the other provinces,” says Ablett, “have indicated if they will allow phased retirement.”

What’s next: Because many individuals from the baby-boom generation will probably want to — or have to — work into traditional retirement age, groups are pushing all provinces to adopt phased-retirement schemes. In addition, CARP is asking the federal government to make it easier for older Canadians who want to continue working to start drawing down their Canada Pension Plan assets. While it’s possible to do so now, it’s a complicated process that requires workers essentially to stop working for two months and then return to work, says Eng: “CPP makes you jump through some hoops.”

> Registered Disability Savings Plan. Slated to launch before the end of this year, the registered disability savings plan is similar to the RESP in many ways. A sponsor sets up the plan; contributions are not tax-deductible, but accrued interest grows tax-free until withdrawal; and there are federal grants and bonds to augment contributions. RDSPs are available to all Canadians under age 60 who qualify for the disability tax credit or, in the case of a child, the child disability credit.

There is a lifetime limit of $200,000 per beneficiary, and annual grants are based on individual (at age of majority) or family income. Unlike an RESP, the money in an RDSP can be used for anything. But there are some limits on when planholders can withdraw grant and bond money. IE