Converting an RRSP to a RRIF questions . . . | RRSPs and RRIFs | Discussion forum

Latest possible conversion is by the end of the year in which you turn 71, let's say, it is this year. Then NEXT calendar year you have to withdraw a set percentage of your account's value on December 31 of this year. Or more, if appropriate for your personal situation. The percentage for 71 is 5.28%.

RBC "5 things to know about RRIF":
1. You aren't required to make a RRIF withdrawal in the first year your account is opened. You have until the end of the following year to make your first withdrawal
2. All withdrawals are included in your income for the year and are taxable at your marginal income tax rate
3. If you have more than one RRIF account, you must withdraw at least the minimum annual amount from each of your accounts
4. You can choose "in-kind" RRIF withdrawals — this means you can withdraw securities at their fair market value (without selling them) to help meet the annual minimum withdrawal requirement
5. Withholding taxes will apply to withdrawals of cash and/or in-kind securities that exceed your annual minimum amount.

With TD DI is it a matter of converting the RRSP account to a RRIF account (i.e. same account number) or do you open a new RRIF account (new account number) and then, once open, transfer investments from the RRSP account to the new RRIF account?

If the latter then it's probably a good idea to have the RRIF account open by the beginning of the last quarter of this year so that you can make sure any dividends, etc paid in the last quarter find their way into the RRIF account or else (if they still go to the RRSP account) get it corrected for the first quarter of next year, no?

In this household, we converted at 71 a few years ago through a couple of banks/CUs and also TDDI.

I think there is an excess of worry expressed in this thread. The FIs are quite familiar with the conversion process. You are just changing suitcases, as it were, not changing the contents. Dividends etc will go where the investment is at that time. If it's in the RIF, then that's where they will go. Pooreva's summary is accurate and will apply elsewhere as it's all standard procedure.

There are other things worth focusing on, namely....

Don't leave it until the end of the year in which you turn 71. Sooner is better and it won't have a negative effect to start early in the year. I had one once (Scotiabank) that told me in early November or late October that they required an in-person visit to my specific branch which they couldn't arrange until January!
If for some reason you don't get it done, almost certainly they will do it automatically for you at end of year.
The reasons for starting early are peace of mind, control of withdrawal date, ensuring beneficiary form in effect, choosing spouse birthdate etc, and thus not leaving it all up to the FI. If it's a trading account you also need to start thinking about this early so that there will be enough cash available to pay out the mandatory amount every year. You don't have to withdraw until next year but you may need to make that clear to your FI (most will start it the next year automatically).
You will need a new beneficiary form for your RIF. Get the account opened and the form on file before you arrange for the transfer. You can have both RSP and RIF accounts at same time up to end of year turning 71.
You CAN choose the specific withdrawal date that suits you, although some FIs will balk at this and tell you they have one date for everyone. You must insist on your rights.
Remember that mandatory withdrawals are based on the balance at end of previous year. If it's a trading account, your balance could have declined since then, but you still must pay as of Dec 31 balance. This tends to have a conservatizing effect on investors, once they realize the implications.
The rate of withdrawal is based on age at previous year end.

We have found that the attitude from FIs is often that you should just leave it to them and can sometimes be dismissive of client's desire to be involved. Thus, it's possible they will not prompt you do a new beneficiary form or ask you for the date on which you want withdrawals or whether you want the age on which mandatory withdrawals are based to be that of the annuitant or that of the spouse , which is your option and may be an important consideration for some.

In my experience, these are the important issues that may get overlooked or misunderstood.

As Loonie mentioned, make sure one signs a RRIF beneficiary designation for the new RRIF if one wishes to designate the beneficiary that way.

Probate Court almost tossed out the RRSP beneficiary designation form for a $370,000 RRIF.

Most here already know this but for those who don't ...

RIF's have yearly Withdrawal Minimums. LIF's have Minimums and Maximums per this schedule ...

Whoever owns the shares on record date gets the subsequent dividend payment.

cgouimet said

The withdrawal formula for any year is PreviousYearEndBalance * CurrentYear % from RRIF table; 5.4% @ 72 climbing to, and staying at, 20% @ 95.  

To be more precise, the rate of 5.40% applies in the year in which you TURN 73. Depending on your birthday and withdrawal schedule, you might be 73 or 72 for that rate.
By using the birthdate of the younger spouse, you may be able t stay with a rate lower than you would normally be subject to - if so desired. Personally, I think this is a good idea as it gives you more flexibility and control. You can always take out more if and when you want.

The record date is not the ex-dividend date.

The ex-dividend date is the first day the shares trade without the dividend. With T+2 trade settlement, the ex-dividend date is actually the trading day before the record date.