RRIF Minimum Payments

New Legislation Passed to Reduce RRIF Minimum Payment for 2020

As part of the COVID-19 Emergency Economic Response Plan, the government has passed legislation that allows you to lower your Registered Retirement Income Fund (RRIF) minimum payment for 2020 by 25%.

If you currently have a RRIF, you can reduce your income to the RRIF minimum amount by 25%.

How Are RRIF Minimums Calculated?

Every year your RRIF minimum payment changes based on two factors: 1) Market Value of your RRIF on January 1st; and 2) the Government’s RRIF Minimum percentage for your age. The value of your RRIF on January 1st is multiplied by the RRIF minimum percentage factor. The result is the RRIF minimum payment for the year.

For 2020, the RRIF Minimum Percentage Factor is now reduced by 25%.

For example: On January 1st, 2020, Mark is 70 years old and the value of his RRIF is $250,000. Based on Mark’s age, the government RRIF minimum factor is 5%. Mark’s minimum RRIF payment is $12,500 for 2020. However, based on the new government legislation, Mark can choose to receive $9,375 from his RRIF in 2020 (3.75% of his January 1st market value.)

RRIF graph

Do the Same New Rules Apply to LIFs and Locked-In RRIFs?

Yes, you can reduce your Life Income Fund (LIF) and Locked-In RRIF minimum payments by 25% in 2020.

What if You Already Withdrew the RRIF Minimum for 2020?

Unfortunately, you cannot reverse the RRIF payments or re-contribute the excess amount. If you have a scheduled monthly RRIF payment, you could reduce or stop the future payments if you have already received the reduced minimum amount.

Are You Required to Reduce your RRIF?

It is your choice. If you don’t need all the RRIF income you currently receive, we recommend you take advantage of the reduced the RRIF minimum. This will allow for your investment to continue to grow tax-sheltered and have the potential to recover from any recent market volatility. By taking a lower RRIF payment, you are reducing your taxable income, which would reduce your taxes payable for 2020.

If you would like to take advantage of this RRIF minimum reduction or find out if this would be beneficial for you, please contact us.

Comment (1)

  • Avatar
    Doris Chen

    Hi Iwona,

    Excellent info. Going to spend it as planned before the Corona virus get to it.

    Keep healthy and safe

    May 6, 2020 at 11:37 am

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