CFM After-Tax Savings

In this article:

  1. Activating the CFM Savings column
  2. Using the CFM Savings column for deposits
  3. Using the CFM Savings column for withdrawals
  4. Using the CFM Savings column without Capital Assets
  5. Using the CFM Savings column with Overrides
  6. Clearing the CFM Savings column
1

Activating the CFM Savings column

CFM Savings helps automate Contributions (savings/withdrawals) before the CFM Start Age to allow you to compare different savings strategies and find the best approach for your client. This column is automatically enabled when you apply the Required/Available Savings or Lump Sum Recommendations to your projections. 

To activate the CFM Savings feature manually, you'll click the blue gear icon in the Capital Assets header of the Planning Page.

Then, you can check the box to Show the CFM Savings column for this scenario. If you find the column useful and don't mind the extra information on the Planning Page you can choose to check the box to enable it for new scenarios as well.

Once you select Save you'll see a new column on the Planning Page titled CFM After-Tax Savings.

The column allows you to set a target After-Tax Savings value for years prior to the first retirement age or the year that the CFM Start Age is set (whichever is earlier in the plan).

2

Using the CFM Savings column for deposits

The CFM Savings column allows you to enter a total target after-tax savings target for a given year or period. Snap will then allocate Contributions to the Capital Assets in the plan based on the CFM Order.

For instance, we could remove all other overrides from the Capital Assets and then set a savings goal of $14,000 per year using the CFM After-Tax Savings column.

Snap Projections will make Contributions to the Capital Assets to achieve total After-Tax Savings of $14,000. In this case, $18,000 is contributed to the RRSP first since the CFM Order for Contributions is R, T, N (which represents registered, TFSA, non-registered). Then, $1,802 is contributed to the TFSA. Gross savings are $19,802 and the tax reduction of $5,802 from the RRSP contribution brings the total After-Tax impact on cash flow to our target of $14,000.

If we change the CFM Order for Contributions then Snap will make new Contributions achieving the same $14,000 of After-tax Savings.

For example, if we change the Contributions order to T, R, N then Snap will first use up any TFSA contribution room before making deposits to the RRSP. From an after-tax standpoint, for this client, $11,960 to an RRSP and $6,000 to a TFSA is equivalent to saving $18,000 to the RRSP and $1,802 to the TFSA. This feature should help you to easily compare equivalent scenarios and determine both how much additional savings the client requires and where to best make those Contributions.

3

Using the CFM Savings column for withdrawals

You can also use the CFM Savings column to automate withdrawals. If you enter a negative value in the CFM Savings column then Snap will use the CFM Order for withdrawals to achieve your target After-Tax Savings value.

If a client requires $100,000 for a home renovation or gift, you can compare different withdrawal strategies to see which approach best meets their goal while factoring in tax implications.

4

Using the CFM Savings column without Capital Assets

The CFM Savings column relies on existing Capital Assets in the plan to apply Contributions. If you enter a CFM Savings value and then Run Scenario, the value that you entered may be reduced if there aren't the required Capital Assets in the plan to make deposits.

For instance, if you set a target to save $20,000 in the CFM After-Tax Savings column and only have a TFSA added to the plan, then once you select Run Scenario Snap will replace your $20,000 with the amount it was able to save into the TFSA. There's nowhere else for the software to contribute savings so it adjusts the $20,000 to the total it's able to save of $6,000.

As a result, it's recommended to have a TFSA, RRSP and non-registered Capital Assets entered into the plan before using the CFM Savings column. If the client doesn't currently have one of the account types, you can still enter it on the Assets page with a $0 Value.

If you have multiple accounts of the same type (e.g., two non-registered accounts) then deposits to non-registered assets calculated by the CFM After-Tax Savings tool will be split evenly across all available accounts of that type.

5

Using the CFM Savings column with Overrides

It's common in Snap to use overrides to contribute to Capital Assets on an annual or ongoing basis. You can use the CFM Savings column in addition to manual overrides but it's important to understand how the two pieces of functionality interact.

A value entered in the CFM Savings column will be saved to the client's Capital Assets in addition to the Contributions that you've overridden manually.

In this instance, the $20,000 of CFM After-Tax Savings is deposited to the non-registered account in addition to the $12,000 manually contributed to the RRSP and $3,000 to the TFSA. Since there are overrides on both of the registered accounts, the only available Capital Asset for deposits is the non-registered account.

If you'd like CFM Savings to be allocated to a TFSA on top of your manual overrides, you'll need to add a second TFSA to the plan with a $0 Value.

After adding the new TFSA, the CFM After-Tax Savings tool can allocate contributions to this account up to the available contribution room. Snap then deposits any remaining savings to the non-registered account.

6

Clearing the CFM Savings column

There are two primary ways to remove a previous CFM Savings amount.

1. You can select the dollar value and change it to $0 (for a given year or period).

2. You can turn off the CFM Savings column within the plan to set all values to $0. Then if you want to continue using the tool you can turn it back on to set new savings values.

Back to top

Still need help? Contact Us Contact Us