The Registered Retirement Income Fund (RRIF) and its withdrawals are complex topics because each situation is different. Let’s provide you with guidelines and different scenarios so you have all the pointers you need to prepare for this big life transition.
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You’ll Learn
- Let’s start with something easy. Simply put, a RRIF is a registered retirement account. How can we describe it in more detail?
- Since the RRIF replaces the RRSP, how can we differentiate them? The main differences are in the minimum withdrawals and income-splitting rules.
- Of course, RRIF withdrawals count as an income and are therefore taxed accordingly. Investors should also expect some fees.
- How should investors prepare to receive RRIF withdrawals? A selling strategy is necessary. A cash reserve using the GICs ladder can also be useful.
- Can investors use the three D’s of tax optimization for their RRIF withdrawals?
- While they are not required to use it before 71, some investors transfer their RRSP into a RRIF sooner. Why should investors transfer their investments into a RRIF account?
- When the time comes, how should retirees use their withdrawals? Should they take them as income or reinvest them in a tax-sheltered account?
- To end the episode, let’s simplify all this, Mike. What is your step-by-step strategy for managing RRIF withdrawals? We share a simple 3-step methodology.
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Enjoyed this episode. I retired early last June and am learning my way through RRSP conversions and RRIF withdrawals. One area you didn’t touch on is the withholding tax for withdrawals.
I discovered that your minimum withdrawal amount begins the calendar year AFTER you converted it into a RRIF, so you don’t have to withdraw on the first year.
However, even though you can still withdraw from your RRIF the first year, there will be a withholding tax on the ENTIRE withdrawal because the minimum withdrawal amount doesn’t start until year 2. This caught me by surprise and had I known that, I would have converted my RRSP’s to RRIF’s last year. I hate having my money sitting in the government’s hands longer than necessary waiting for a refund. 🙂
Also, regarding withdrawal fees… mine and my wife’s RRIF’s are with WeathSimple and they don’t have fees for withdrawals whether scheduled or additional.
Great information, many thanks