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Email this3:31 pm
October 21, 2013
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Some of us have been asking for this for a while, and Hubert has finally come through.
The one-year RIF is offered on the same basis as their other one-year terms, with a tiered rate which increases every 3 months, redeemable.
5:05 pm
February 17, 2013
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Thanx Loonie. One of the reasons I chose Hubert was their flexibility with regards to RIF payouts. Don't see much on the web site about the one year term other than:
Please note that when you invest in Hubert’s 2 – 5-year RRIF term deposit, you are able to withdraw from the term at any time, along with your regular yearly payment.
and
Again, you can choose to redeem your 1-year term at any time. If you do, all interest that has been paid to you is yours to keep, but if you redeem between a quarter you will not receive any interest from that quarter. For example, if you redeem after seven months, you’ll only receive interest up to month six!
How would they administer a 1 year term , or several one year terms, or a mix of terms, with monthly RIF payouts?
5:20 pm
April 26, 2019
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Rick, they snuck the 1 year GIC for RRIF in. No fanfare for all of us pissed off investors.
See pic as it includes RRIF 1 year. They used to have a rider that clearly stated no 1 year GIC CDIC. The * refers the terms of the one year GIC.
5:46 pm
April 26, 2019
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It is nice to see. The only reason why I will stay with Hubert is for the self control of RRIFs. I will be moving everything else out and the largest amount RRIFs, for my investment strategy, from Hubert as well too. I want to lessen my Manitoba FIs. Also next year both wife and I will be on mandatory RRIF withdrawals so it will be over 3 FIs, so no need for keeping the withholds under control.
Another thing I noticed is that when I put my money into RRIF from RRSP, Hubert did not contact me for payment dates NOR do they provide the mandatory age amount tax free and withhold taxes on the “in excess amount”. Coast Capital did though. Yikes did I say they did something good? Slap me!!
So I don’t want any lectures on this one.
I have taken 3 withdrawals (over $5000 total) of RRIF from Hubert and only had a 10% withhold. I pay enough taxes from pensions etc to cover my tax bill. But I have heard others say that on their second or third withdrawal once they exceed $5000 at any one FI, the FI recovers the complete 10% shortage. My mother-in-law has an advisor that does that too. But as I did her taxes a few days ago it backfired on him and 20% overall was taken. I am thinking some systems are being programmed to catch this.
Any comments on who does take 20% on the gross no matter what. Or who doesn’t and only withholds as per each withdrawal only.
2019 experience......Hubert does not.
1:22 am
October 21, 2013
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We discussed the withholding tax earlier in this regard. It depends on whether the FI believes you planned the extra withdrawals or decided later on that you wanted to take out more.
It might be wise to explain to the FI at the time of second withdrawal that you changed your mind because of ... If your explanation sounds reasonable, they ought to do it the way you want, but you might need to ask for this and it might require a supervisor's decision if their default is otherwise. Some examples might include unexpected expenses (roof replacement, divorce, etc) or losses on other market-based RIF investments. This year in particular, there could be a need for additional funds if other sources not doing well. But I think that if you did this every year, they (and CRA) would have a right to be suspicious, as that is not the intention of the rule.
You could consider whether you would be better off to reduce deductions at source from other income for CRA if you want to make larger RIF withdrawals and not worry so much about the withholding tax.
Hubert does make this easy, however, and I appreciate that. One year I had to open up an RIF, transfer funds from RSP to RIF for pension splitting, and then immediately withdraw the funds from the RIF, all in one day. It was approx Dec 29. They were very obliging about this.
It may be true for you but I would not necessarily assume that it will be smooth sailing once you hit 72. It depends on your particular situation. I am topping up income to maximize tax bracket with additional RIF funds annually in order to reduce the RIF tax liability as I am confident I will be better off this way over time. Bear in mind also the point at which the OAS clawback begins if that applies to you. I wouldn't be at all surprised if the formula for this changes but it is now at about 79K. The tax structure more generally could also change in the next few years and likely will, so do what's best for now.
8:28 am
January 12, 2019
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Loonie said
Some of us have been asking for this for a while, and Hubert has finally come through.
The one-year RIF is offered on the same basis as their other one-year terms, with a tiered rate which increases every 3 months, redeemable.
A 'small' step in the right direction ... but not enough to regain my loyalty & $$$.
" Live Long, Healthy ... And Prosper! "
9:30 am
April 15, 2020
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Rick said
Thanx Loonie. One of the reasons I chose Hubert was their flexibility with regards to RIF payouts. Don't see much on the web site about the one year term other than:Please note that when you invest in Hubert’s 2 – 5-year RRIF term deposit, you are able to withdraw from the term at any time, along with your regular yearly payment.
and
Again, you can choose to redeem your 1-year term at any time. If you do, all interest that has been paid to you is yours to keep, but if you redeem between a quarter you will not receive any interest from that quarter. For example, if you redeem after seven months, you’ll only receive interest up to month six!
How would they administer a 1 year term , or several one year terms, or a mix of terms, with monthly RIF payouts?
One thing I learned from my decreased parents RIF at a large Manitoba credit union. My parents purchased 5 year GICS. When the money was withdrawn Dec 31st and money was withdrawn from the GIC with the lowest interest rate.
9:45 am
April 15, 2020
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GICinvestor said
It is nice to see. The only reason why I will stay with Hubert is for the self control of RRIFs. I will be moving everything else out and the largest amount RRIFs, for my investment strategy, from Hubert as well too. I want to lessen my Manitoba FIs. Also next year both wife and I will be on mandatory RRIF withdrawals so it will be over 3 FIs, so no need for keeping the withholds under control.Another thing I noticed is that when I put my money into RRIF from RRSP, Hubert did not contact me for payment dates NOR do they provide the mandatory age amount tax free and withhold taxes on the “in excess amount”. Coast Capital did though. Yikes did I say they did something good? Slap me!!
So I don’t want any lectures on this one.
I have taken 3 withdrawals (over $5000 total) of RRIF from Hubert and only had a 10% withhold. I pay enough taxes from pensions etc to cover my tax bill. But I have heard others say that on their second or third withdrawal once they exceed $5000 at any one FI, the FI recovers the complete 10% shortage. My mother-in-law has an advisor that does that too. But as I did her taxes a few days ago it backfired on him and 20% overall was taken. I am thinking some systems are being programmed to catch this.
Any comments on who does take 20% on the gross no matter what. Or who doesn’t and only withholds as per each withdrawal only.
2019 experience......Hubert does not.
Last year I purchased a new SUV. I needed to withdraw money from my RRSP to pay for it. I made 3 withdrawals. $5,000, $10,000 and $9,000. The withholding tax was 10%, 20% and 30%. $500, $2,000 and $2,700. When I filed my 2019 income tax return I got some money back. Next year I am forced to convert my RRSP to RIF and make the minimum annual withdrawal.
9:52 am
April 15, 2020
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cruzinalong said
Last year I purchased a new SUV. I needed to withdraw money from my RRSP to pay for it. I made 3 withdrawals. $5,000, $10,000 and $9,000. The withholding tax was 10%, 20% and 30%. $500, $2,000 and $2,700. When I filed my 2019 income tax return I got some money back. Next year I am forced to convert my RRSP to RIF and make the minimum annual withdrawal.
I took one withdrawal of $15,000 from my RRSP a few years ago. The withholding tax was 30%. I got the refund on income tax filing. For me it is better to withdraw in smaller chunks. $5,000 and $10,000. Life is a learning experience everyday.
4:09 pm
April 26, 2019
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Loonie.
It might be wise to explain to the FI at the time of second withdrawal that you changed your mind because of ... If your explanation sounds reasonable, they ought to do it the way you want, but you might need to ask for this and it might require a supervisor's decision if their default is otherwise.
There is no talking, for me anyways, when doing a RRIF withdrawal at Hubert.
It may be true for you but I would not necessarily assume that it will be smooth sailing once you hit 72. It depends on your particular situation. I am topping up income to maximize tax bracket with additional RIF funds annually in order to reduce the RIF tax liability as I am confident I will be better off this way over time.
Me too, to reduce taxes at death, and to be unlikely eligible for income based benefits such as Fair Care PharmaCare BC. No problem with clawback...it won’t happen as right now I only take enough to net $12000 for TFSA and to remain in lowest tax bracket.
So your 72 comment confuses me. I thought that after your 71st birthday you have to move your RRSP funds into RRIF by December 31 of that year. And then the next year (when you could still be 71) you must start taking the mandatory age amount, with no tax withheld....correct?
So I will have RRIF in 2 FIs and wife in 1 FI.
FI 1 Take mandatory amount ie. $3500 no tax withheld
FI 2 Take mandatory amount ie. $3500 no tax withheld
FI 3 Take mandatory amount ie. $3500 no tax withheld
So let’s say $10,500 is not enough. And I later or at the same time I ask for $2800 more. So would ONLY the $2800 have 10% taxes withheld as withdrawn in excess? Or would 20% be applied to $3500 plus $2800 = $6300?
I would not necessarily assume that it will be smooth sailing once you hit 72
Why do you say that?
8:57 pm
October 21, 2013
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There is nothing to prevent you phoning Hubert (or any other FI) and discussing your impending RIF withdrawal and what the withholding tax will be.
You understand correctly about the schedule re: ages 71 and 72. I am unclear what the confusion was.
My comment about things not necessarily being smooth after you start the mandatory withdrawals had to do with the top-ups necessary for tax brackets or any other inconsistencies from year to year or changes in the tax code. Income from other sources won't likely be the same every year. You will need to recalculate every year how much extra you need to withdraw. And you will need to plan for this possibility by making sure you have enough RIF liquid cash to draw from.
Probably most of your income comes from guaranteed and predictable sources, which makes it easier to predict what you will need. This is probably less true for us, so I have to make new calculations every Fall. The required top-up can vary by several thousand from year to year, although I think I can foresee this getting easier in a couple of years as one variable source drops out and at least two predictable ones are added. But there are always going to be changes. A spouse dies, a property is sold, an inheritance is received, an annuity is purchased, deferred pension received, life insurance received, some investments do so badly that income is affected, and so on, not to mention changes in the tax code, which there are definitely going to be.
8:16 am
February 17, 2013
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So what's your magic number? Maximum combined income to still receive OAS and other benefits? I'm not there yet (spouse is still working)
10:29 am
April 26, 2019
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Rick said
So what's your magic number? Maximum combined income to still receive OAS and other benefits? I'm not there yet (spouse is still working)
Are you asking me or Loonie? Magic number? Age? Or RRIF withdrawal?
12:09 pm
February 17, 2013
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GICinvestor said
Are you asking me or Loonie? Magic number? Age? Or RRIF withdrawal?
Does it matter? Line is the same for everyone ....isn't it?
Basically, where's the line that says you earned too much so we're clawing back your OAS dollar for dollar, and no GST rebate, and we're not covering your prescription deductibles? Individual income? Household income? Have a few years yet, but things will be changing for us when we are both on pensions and have to determine RIF withdrawals. I find CRAs' explanation confusing.
3:15 pm
October 21, 2013
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Here is what I know. I think I got it from taxtips but not sure. I got it from what I consider reliable sources anyway.
The Age Amount is a tax credit which starts being clawed back based on individual net income.
Net income is AFTER any pension splitting and includes any dividend gross-up and capital gains. For 2020, the clawback begins on the Federal tax credit at $38,508. It is adjusted annually for inflation. In 2019, it was $37,790. There is a parallel calculation provincially but the point where it kicks in varies by province. At a net income of $89,421 (2020), the Age Amount credit is all gone, federally. I think the clawback amounts to the same rate as the lowest tax bracket but am not sure about that.
The OAS is Federal-only as the OAS is a gift from the federal gov't. In 2020, it begins at $79,054 Net Income. In 2019, it was $77,580. The clawback is complete at $128,137 (2020). I believe they claw back 15% of income above the threshold.
Both are calculated on a per person basis.
I don't have any info on the GST.
I understand the medical expenses tax credit is useless after a net income of about 73K but have no details on that. It should be claimed by the person with the lower income in a couple.
Federally, the next tax bracket kicks in at $48,535 (2020). The one after that starts at $97,069.
Thus, the breaking points for 2020,which you might want to try to meet but not exceed, are:
$38,508
$48,535
$79,054
$97,069
There is an effective increase in your marginal tax rate at each step, and these are cumulative until, in the case of clawbacks, the clawback is complete.
Thus, for example, if my net income without a voluntary RIF withdrawal were $40,000, I would likely withdraw an additional $8,535 if I believed my income was always going to be secure at at least the $40,000 level. Tax rates and tax credits etc can change, and will change; I make the assumption my situation may not be any better because of those changes - and could be worse. I like to get rid of the RIF tax liability whenever I can; it makes me feel better, and that is valuable to me.
If you study this carefully, you can perhaps see why I think RSPs are a really bad idea for many of us as the income from them can easily bump you into another category and cost you much more than you bargained for when you bought in. My philosophy is to take out as much RSP/RIF money as I can to fill up the category I fall into. I regret that I didn't start earlier on this strategy. Anyone who has substantially retired should do the calculations and see what works best for them.
3:05 am
February 17, 2013
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Thanx Loonie. It looks like all your numbers are for individual income? I am under the impression that household income is a factor. If I read it right, we are good up to about 38K each before the federal clawback kick in, and 80K before it affects OAS?
I agree....wish they had TFSAs way back when I was young and never going to get old.
Would like to start draining the RSPs, but do what with them? No TFSA room left.
Kind of hard to plan at this stage. Still in saving mode right now while wife is working.
7:58 am
April 26, 2019
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Depending on income and taking into account the tax split with spouse cannot exceed 50% I use these guidelines to remove more RRIF, but only if I can feed my TFSA, the difference between your Taxable income and $47630 or $9259 or $147, 667 etc for Federal tax rates and some bearing between your Taxable income and $40,707 or $81,416 or 93,476 etc for the lower Provincial tax rates.
Also think this one out to see what suits you.
Still saving:
Put Savings into RRSP and make sure the tax offset goes to TFSA
Put Savings into TFSA
Put Savings into Non Registered and Pull Funds out of RRSP via RRIF to TFSA..which has more tax implications but begins to drain your RRSP. Then in to retirement treat your TFSA like RRSP.
Right now we have not used any RRSP or RRIF and next year we go to forced RRIF withdrawals. We do use interest from non registered investments to bolster our pensions. I also asked PT yesterday if they will deposit interest only, annually from a multi year TFSA GIC to the TFSA savings account, and they said yes. The idea I had was to let interest payments accumulate in the TFSA savings and then buy a $1000 GIC for one year and continue to buy $1000 TFSA GICs with interest payments. Then the first TFSA money would be from a $1000 GIC withdrawal. I would do same with Hubert and with their 1 year GIC you have options to cash it in before maturity. BUT cannot do that with Oaken. So I will begin to remove the few TFSA's I have with Oaken.
Funds to bolster our pensions will come from, in the order of:
Non Registered Interest
Non Registered Principal
RRIF payments
TFSA Interest
TFSA Principal
PS. I retired at age 55 with a golden hand shake.
8:28 am
April 26, 2019
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GICinvestor said
More info here.
Depending on income and taking into account the tax split with spouse cannot exceed 50% I use these guidelines to remove more RRIF, but only if I can feed my TFSA, the difference between your Taxable income and $47630 or $9259 or $147, 667 etc for Federal tax rates and some bearing between your Taxable income and $40,707 or $81,416 or 93,476 etc for the lower Provincial tax rates.
Also think this one out to see what suits you.
Still saving:
Put Savings into RRSP and make sure the tax offset goes to TFSA. The offset in my younger years I totally over looked using it to invest for retirement.
Put Savings into TFSA
Put Savings into Non Registered and Pull Funds out of RRSP via RRIF to TFSA..which has more tax implications but begins to drain your RRSP. Then in to retirement treat your TFSA like RRSP.Right now we have not used any RRSP or RRIF and next year we go to forced RRIF withdrawals. We do use interest from non registered investments to bolster our pensions. I also asked PT yesterday if they will deposit interest only, annually from a multi year TFSA GIC to the TFSA savings account, and they said yes. The idea I had was to let interest payments accumulate in the TFSA savings and then buy a $1000 GIC for one year and continue to buy $1000 TFSA GICs with interest payments. Then the first TFSA money would be from a $1000 GIC withdrawal. I would do same with Hubert and with their 1 year GIC you have options to cash it in before maturity. BUT cannot do that with Oaken. So I will begin to remove the few TFSA's I have with Oaken.
Funds to bolster our pensions will come from, in the order of:
Non Registered Interest
Non Registered Principal
RRIF payments
TFSA Interest
TFSA PrincipalPS. I retired at age 55 with a golden hand shake.
9:49 am
April 6, 2013
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Loonie said
…
I understand the medical expenses tax credit is useless after a net income of about 73K but have no details on that. It should be claimed by the person with the lower income in a couple.
…
Medical expenses tax credit is for medical expenses above the lower of these two thresholds:
- 3% of net income
- $2,352
$2,352 ÷ 3% = $78,400 is just the net income where the fixed $2,352 threshold takes effect and the 3% clawback stops.
One is still eligible for the tax credit with more than $78,400 of net income.
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