Taxes on lump sum payment?
It depends on the exact nature of the lump sum payment. If this is rollover from a pension plan, then it can be moved into a locked-in RRSP without any tax liability. However, if it is a “retiring allowance” (which is what it sounds like from your description), then only a portion may be eligible for RRSP transfer with the balance subject to tax.
There is a full chapter on retiring allowances in Gordon Pape’s 2001 Buyer’s Guide to RRSPs that explains how all this works. Briefly, you are allowed to roll into an RRSP tax-free an amount equal to $2,000 times the number of years or part-years that you worked for the employer up to and including 1995. No credit is given for any years after that. There is also an additional rollover allowance for years in which you were not a member of an employer pension plan. – G.P.