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Email this8:19 pm
December 12, 2009
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In short, yes, they should. I do not see a purpose in government micro-managing the minimum by which someone must withdraw from their RRIF every year, using an arbitrary, government-contrived withdrawal schedule. Pension plans are not subject to the same arbitrary withdrawal limits. Moreover, mandatory minimum withdrawals from RRIFs do not in any way, shape, or form evade income taxes. At the end of the day, the tax will be paid, while one is living or even one is dead. Mandating fixed withdrawal amounts based on age without regard for declines in market value makes zero sense.
Cheers,
Doug
a.k.a. Your Millennial Seniors' Advocate 
9:11 pm
April 27, 2017
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Market isn’t the issue. Timing is hard and in any case you could withdraw in kind.
Unnecessary meddling - yes. 100%. But nobody will change anything. Governments like meddling. Besides, a small tax income now is far better for any government than a larger tax income for some future government.
9:15 pm
October 27, 2013
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This subject has been discussed in other forums. The somewhat general consensus is CD Howe is an ideological wingnut with flawed logic. It misses the points that: a) no one is forced to spend all of the RRIF minimum annual withdrawal, and 2) the annual minimum withdrawal can be taken in kind to a non-registered account or if there is TFSA room, into a TFSA. That is what savvy investors do if they have equities and bonds in their RRIFs.
No harm is done AND the taxpayer meets the terms and conditions of the contract they entered into when they signed up for RRSPs. I have written rebuttals to CD Howe's flawed ideology just as I would do so against the left wing equivalent CCPA.
11:31 pm
October 21, 2013
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Nobody is forced to spend their RIF withdrawals - and nobody is forced to buy into an RSP in the first place.
If you don't like the rules, don't play the game. RSPs are the government's creation, and they are entitled to run it as they see fit, but I think it would not be fair to increase the mandatory withdrawal after one has already bought in.
RSPs were introduced to ensure people had sufficient retirement income (and no doubt with an eye to reducing reliance on social programmes to make it through to the end).
Seems to me that they work out well for a minority of people who happen to fit within certain financial parameters both during their contributing and withdrawing years. Everyone else complains about them for one reason or another - me included! C D Howe Inst is the voice of a particular segment of complainers.
Personally, I wish they'd never been invented, but they work for some.
12:40 am
April 6, 2013
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It looks like a disingenuous proposal for another tax break for the wealthy.
RRIF holders who are not so well off won't benefit because they are withdrawing more than the minimum as they need the money.
That's not surprising for the C. D. Howe Institute. In 2017, they proposed to raise the RRSP contribution limit from 18% of earned income to 30%! What kind of taxpayer can take advantage of such a change to sock 30% of their earned income away each year into an RRSP?
12:57 am
February 7, 2019
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mordko said
Market isn’t the issue. Timing is hard and in any case you could withdraw in kind.Unnecessary meddling - yes. 100%. But nobody will change anything. Governments like meddling. Besides, a small tax income now is far better for any government than a larger tax income for some future government.
One tax strategy is to delay and minimize RIF income as much as possible so as to maximize your OAS income in the short term. So, reducing or eliminating the minimum RIF withdrawal would increase the government current burden.
| CGO |
2:21 am
November 18, 2017
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Norman1:
It looks like a disingenuous proposal for another tax break for the wealthy.
I agree. Suspect anything from the C.D. Howe institute.
RetirEd
RetirEd
4:41 am
March 30, 2017
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Norman1 said
It looks like a disingenuous proposal for another tax break for the
I don’t agree. It only affects timing of the taxation. It’s NOT a tax break.
Yes it may affect OAS eligibility but then again I don’t agree with OAS clawback either.
The government makes it unnecessarily complicated and this forced withdrawal benefits the administrator who collects withdrawal fee every year, guaranteed $50 every year or whatever the fee is.
5:30 am
April 27, 2017
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cgouimet said
One tax strategy is to delay and minimize RIF income as much as possible so as to maximize your OAS income in the short term. So, reducing or eliminating the minimum RIF withdrawal would increase the government current burden.
True but an easy (and better) way around this issue: don’t pay OAS to anyone with assets over a certain balance. Whether its a large RRSP or a $5M house.
And if one delays RRSP withdrawal until death, the eventual tax receipt should be larger than cumulative tax income from ongoing withdrawals.
6:51 am
April 27, 2017
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Norman1 said
That's not surprising for the C. D. Howe Institute. In 2017, they proposed to raise the RRSP contribution limit from 18% of earned income to 30%! What kind of taxpayer can take advantage of such a change to sock 30% of their earned income away each year into an RRSP?
How about a couple with kids out of university who need to refocus on retirement savings? In general, envy isn’t a sound argument for anything.
6:53 am
March 15, 2019
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Withdrawals in kind.
Would someone please show me where it is possible to make RRIF withdrawals in kind. This would be useful for folks who have equities in their RRIF.
BTW: I think the logic in minimum withdrawals is to wind-down your RRIF by age 90.
7:09 am
October 27, 2013
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Every brokerage I know of allows one to transfer equities (as a minimum) out of one account into another. Some may require forms, some may require a phone call. Check your brokerage's instructions.
7:10 am
April 27, 2017
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COIN said
Withdrawals in kind.Would someone please show me where it is possible to make RRIF withdrawals in kind. This would be useful for folks who have equities in their RRIF.
BTW: I think the logic in minimum withdrawals is to wind-down your RRIF by age 90.
Rules for withdrawals in kind: https://www.taxtips.ca/rrsp/in-kind-withdrawals-from-rrsp-or-rrif.htm. At Questrade you would be required to write a letter with instructions specifying how many shares to transfer between accounts.
Whatever the logic of minimum withdrawals might be, the net effect is to complicate by meddling.
8:23 am
September 11, 2013
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Here is RBC's info, including re in kind:
https://www6.royalbank.com/en/di/hubs/investing-academy/chapter/rrif-faqs-find-the-answers-you-need/ki58kjjw/ki58kjqy
mordko, a couple that hasn't been able to contribute to rrsps for a while due to other financial priorities still has those years' contribution room available, moving from 18% to 30% is a different issue.
8:56 am
November 8, 2018
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Norman1 said
It looks like a disingenuous proposal for another tax break for the wealthy.RRIF holders who are not so well off won't benefit because they are withdrawing more than the minimum as they need the money.
My parents contributed to RRSP at their time. Currently, they are doing just fine on combination of CPP+OAS+GIS and do not need extra money. They are forced by RRIF rules to make minimum withdrawal which, in turn, reduces their GIS.
That RRIF withdrawal generates what in fact is extra income tax for them.
I would not call people who are eligible for GIS "wealthy."
9:27 am
February 7, 2019
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Alexandre said
Norman1 said
It looks like a disingenuous proposal for another tax break for the wealthy.RRIF holders who are not so well off won't benefit because they are withdrawing more than the minimum as they need the money.
My parents contributed to RRSP at their time. Currently, they are doing just fine on combination of CPP+OAS+GIS and do not need extra money. They are forced by RRIF rules to make minimum withdrawal which, in turn, reduces their GIS.
That RRIF withdrawal generates what in fact is extra income tax for them.I would not call people who are eligible for GIS "wealthy."
Not wealthy but less needy than others without RIF's. That RIF is a result of them investing in RSP's to have a 'wealthier' retirement and deffering their tax load to now ...
| CGO |
9:30 am
September 11, 2013
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RRSPs & RRIFs were brought in for a specific purpose, i.e. to help those who chose to use them (i.e. use is not mandatory, it's optional) accumulate money tax-free in order to help fund their annual pension needs during retirement time.
They were not designed to be another registered method where you can build up your money tax free until death.
If you understand that then you will understand why the minimum yearly withdrawal concept is valid. The plans were not designed for the rest of the Canadians, many of whom are also funding your GIS and other benefits you might enjoy as a senior, to have to wait to get your taxes on this money until it's no longer of use to you, i.e. on death.
If it turns out you thought they were a good idea but then upon retirement you realize for you they actually weren't, well then I guess you made a mistake there.
9:35 am
October 27, 2013
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The intended purpose of means tested programs is to pull back payments based on cash flow generation. Everyone knew when they entered into RRSPs that there would be required minimum annual withdrawals commencing age 71 (or to take out an annuity). The taxpayer has no obligation to 'carry' folk who have the means and responsibility to generate cash flow.
Before more whiners complain, the government DID change the RRIF withdrawal tables in favour of the RRIF holder in 2015. https://lifeannuities.com/articles/2015/new-2015-rrif-withdrawal-minimum-table.html The minimum annual withdrawal rates dropped significantly commencing age 71 due to actuarial changes in longevity. A lot of thought has gone into RRIF withdrawal factors based on actuarial statistics. ISTM whining RRIF holders have become greedy 'gimme' spoiled brats the rest of the taxpaying population has to support.
Edit: I have a RRIF in which I am taking minimum annual withdrawals. I have no objection to honoring my part of the original contract.
9:35 am
February 7, 2019
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Bill said
RRSPs & RRIFs were brought in for a specific purpose, i.e. to help those who chose to use them (i.e. use is not mandatory, it's optional) accumulate money tax-free in order to help fund their annual pension needs during retirement time.They were not designed to be another registered method where you can build up your money tax free until death.
If you understand that then you will understand why the minimum yearly withdrawal concept is valid. The plans were not designed for the rest of the Canadians, many of whom are also funding your GIS and other benefits you might enjoy as a senior, to have to wait to get your taxes on this money until it's no longer of use to you, i.e. on death.
If it turns out you thought they were a good idea but then upon retirement you realize for you they actually weren't, well then I guess you made a mistake there.
Indeed
| CGO |
1:31 pm
November 8, 2018
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Bill said
RRSPs & RRIFs were brought in for a specific purpose, i.e. to help those who chose to use them (i.e. use is not mandatory, it's optional) accumulate money tax-free in order to help fund their annual pension needs during retirement time.They were not designed to be another registered method where you can build up your money tax free until death.
I wanted to make a point that eliminating RRIF mandatory withdrawal will benefit not just wealthy. That's it.
Please write your comments in the forum.