RRIFs and Retirement Strategy

The RRIF and Your Retirement Withdrawal Strategy

Many of us contribute to a Registered Retirement Savings Plan (RRSP) to achieve tax deductions and tax-deferred growth to plan for retirement. When the RRSP must be collapsed, funds are often converted to a Registered Retirement Income Fund (RRIF), which requires minimum withdrawals prescribed by the government based on age (please refer to Canada Revenue Agency for withdrawal rules). RRIF withdrawals are treated as taxable income.

If you plan on holding a RRIF, some forethought should go into your withdrawal strategy. Why? In some cases, withdrawing more than the minimum amount can improve an overall lifetime tax bill. On the other hand, funds kept in the RRIF for as long as possible can benefit from tax-sheltered growth.

Here are some considerations, depending on your situation:

1. Use a younger spouse’s age as a basis for withdrawals
If you have a younger spouse, you may use their age to determine the minimum withdrawal for your own RRIF. This may allow funds to be tax-sheltered for as long as possible or help in preserving income-tested benefits such as Old Age Security (OAS). Keep in mind that you will need to notify us to make the change before the first RRIF withdrawal. Changes can’t be made once a spouse’s age has been used.

2. Accelerate withdrawals to optimize a lifetime tax bill
If your RRIF minimum withdrawal amount and other income put you in a lower tax bracket today than in the future, it may make sense to withdraw more than the minimum to minimize your overall lifetime tax bill. A withholding tax will apply to withdrawals above the minimum amount. If significant RRIF funds remain at death, in the absence of a spouse (which will permit a tax-free rollover of the RRIF), consider that the estate may also be subject to a high marginal tax rate.

3. Use RRIF income to split income or save tax
If you have a spouse in a lower tax bracket, RRIF income may be used for income-splitting purposes. Transferring a portion of the RRSP to a RRIF can occur as soon as the year in which you turn 65 to take advantage of pension-income splitting and the pension tax credit.

4. Use withdrawals to fund a TFSA
If RRIF withdrawals are not immediately needed, consider contributing funds to a Tax-Free Savings Account (TFSA).1 This may be a great way to continue benefitting from tax-preferred growth: future growth in the TFSA will be tax free.

Plan Ahead

RRIF withdrawal considerations should be part of a larger retirement withdrawal strategy. Every situation is different, so please get in touch if you require assistance.


1Subject to available contribution room.

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