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Email this10:46 pm
December 23, 2011
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Does any one know......once you set up a RRIF by Dec 31 of the year of your 71st birthday ...... you have to begin to withdraw a minimum amount as set out by the government. Your portfolio value changes every day.... So here is my question......what is the magical formula/date to determine your value of your RRSP account(s) ??
6:28 pm
July 10, 2011
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I found this doing a google search.. The rates may have changed however not sure when this pdf was released..
9:35 pm
February 17, 2013
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Just me...but when I am approaching retirement I will start moving my portfolio into more stable, risk free investments (HISA's, GIC's). Dealing with mutual funds and the stock market are fine when I am building my nest egg, but when it comes time to rely on it, would prefer something less risky. With the economy as it is and all levels of government getting deeper into a financial abyss, all it takes is another 2008 to reduce my portfolio by half or more to find myself eating dog food with a permanent smile on my face while I greet strangers with "Welcome to Wal-Mart". But that's just my distrusting, paranoid, gun-shy view.
12:09 am
February 22, 2013
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kanaka:
I think you meant "of your RIF accounts" not RSP accounts. I opened a RIF this year and was going to move $12,000 into it to prepare for the $2000 per year I can withdraw tax free. RBC DI told me the date for the calculation was, and I forget exactly, either December 31 or January 1. (As it turned out, being a Royal Circle Line customer meant I could move straight from an RSP to a trading account, without any withdrawal fees.)
But as Rick mentioned one would be better having Fixed Income type investments in the RSP to RIF conversion. My asset allocation will allow me to have bonds and/or bond ETFs (neither totally risk free, but neither of which will take a 50% hit) there and the equity issues in my trading account.
During my asset allocation reviews I always do the calculation that answers the question "what would happen to my total net worth if the market dropped 25%, 50%, 75% and 90%. If one has only 40% in equity issues, then the following occurs:
Market drop ------ Net worth drop
25% ---------------- 10%
50% ---------------- 20%
75% ---------------- 30%
90% ---------------- 36%
Not pretty, but also not the end of the world.
Greg
11:31 am
December 23, 2011
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GSmall99 said
kanaka:
I think you meant "of your RIF accounts" not RSP accounts. I opened a RIF this year and was going to move $12,000 into it to prepare for the $2000 per year I can withdraw tax free. RBC DI told me the date for the calculation was, and I forget exactly, either December 31 or January 1. (As it turned out, being a Royal Circle Line customer meant I could move straight from an RSP to a trading account, without any withdrawal fees.)
But as Rick mentioned one would be better having Fixed Income type investments in the RSP to RIF conversion. My asset allocation will allow me to have bonds and/or bond ETFs (neither totally risk free, but neither of which will take a 50% hit) there and the equity issues in my trading account.
During my asset allocation reviews I always do the calculation that answers the question "what would happen to my total net worth if the market dropped 25%, 50%, 75% and 90%. If one has only 40% in equity issues, then the following occurs:
Market drop ------ Net worth drop
25% ---------------- 10%
50% ---------------- 20%
75% ---------------- 30%
90% ---------------- 36%Not pretty, but also not the end of the world.
Greg
Thanks I have since received my answer. I was looking for what is the cut off date/year to convert an RRSP to an RRIF when you hit the age of 71 and also how and when do you determine the value of your RRIF account (keeping in mind the value changes by the hour) to determine how much you have to withdraw.
I also plan to do some partial withdrawals from my RRSP beginning this year to draw down the total of my RRSP before it is converted to a RRIF to reduce the amount of income I will have to pay with the forced withdraws of the RRIF funds.
Question.
If I withdraw some RRSP money every year beginning this year with the plan of keeping within my tax bracket can I still do the 2000 per year, TAX FREE at age 66-70, of the RRIF too?
See conversations here: https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/income-smoothing-cashing-in-your-rrsp-after-retirement/
2:11 pm
February 22, 2013
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kanaka said
Question.If I withdraw some RRSP money every year beginning this year with the plan of keeping within my tax bracket can I still do the 2000 per year, TAX FREE at age 66-70, of the RRIF too?
See conversations here: https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/income-smoothing-cashing-in-your-rrsp-after-retirement/
I believe the answer to your question is YES, but don't get confused by RSP money and RIF money. Think of it as REGISTERED money.
As I understand it, if one who was 66 to 71 were to withdraw $2000 from an RSP it becomes tax free. If the same person were to withdraw more than $2000 from an RSP the portion above $2000 would attract income tax. (We all know you have to convert your RSP to a RIF at age 71 - but you could convert it earlier if you so desired. You would be forced to withdraw money following the formula "1÷(90 – your current age)" till you reached 71 when the CRA table takes over.)
Originally I understood I needed to move $2000 from my RSP to my (newly created for this purpose) RIF to make this work, but that appears to be discussed by folks due to the fees charged by many institutions for RSP withdrawals (de-registering fee for RSPs). RBC Direct Investing charges $50 per withdrawal but nothing to go from an RSP to a RIF. But as I am a Royal Circle Line client fees are waived so I was able to go directly from my RSP to my Trading account, without the intermediate stop in my RIF.
Here is a link to the applicable CRA website:
http://www.cra-arc.gc.ca/tx/nd.....l-eng.html
and one to the Direct Investing fee schedule:
http://www.rbcdirectinvesting......edule.html
Greg
5:06 pm
December 23, 2011
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GSmall99 said
kanaka said
Question.If I withdraw some RRSP money every year beginning this year with the plan of keeping within my tax bracket can I still do the 2000 per year, TAX FREE at age 66-70, of the RRIF too?
See conversations here: https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/income-smoothing-cashing-in-your-rrsp-after-retirement/
I believe the answer to your question is YES, but don't get confused by RSP money and RIF money. Think of it as REGISTERED money.
As I understand it, if one who was 66 to 71 were to withdraw $2000 from an RSP it becomes tax free. If the same person were to withdraw more than $2000 from an RSP the portion above $2000 would attract income tax. (We all know you have to convert your RSP to a RIF at age 71 - but you could convert it earlier if you so desired. You would be forced to withdraw money following the formula "1÷(90 – your current age)" till you reached 71 when the CRA table takes over.)
Originally I understood I needed to move $2000 from my RSP to my (newly created for this purpose) RIF to make this work, but that appears to be discussed by folks due to the fees charged by many institutions for RSP withdrawals (de-registering fee for RSPs). RBC Direct Investing charges $50 per withdrawal but nothing to go from an RSP to a RIF. But as I am a Royal Circle Line client fees are waived so I was able to go directly from my RSP to my Trading account, without the intermediate stop in my RIF.
Here is a link to the applicable CRA website:
http://www.cra-arc.gc.ca/tx/nd.....l-eng.html
and one to the Direct Investing fee schedule:
http://www.rbcdirectinvesting......edule.html
Greg
AH! So you only use the tool of the RIF to obtain the 2000 per year!! I am used to directing my adviser to deposit money to my bank account when a GIC in my RRSP account matures thus no need for a RRIF. He does this for me at no charge.
So if I take an amount to top up to my tax bracket ie.... 8000 the first 2000 would be tax free???
Thanks Peter
9:37 pm
February 22, 2013
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kanaka said
AH! So you only use the tool of the RIF to obtain the 2000 per year!! I am used to directing my adviser to deposit money to my bank account when a GIC in my RRSP account matures thus no need for a RRIF. He does this for me at no charge.
So if I take an amount to top up to my tax bracket ie.... 8000 the first 2000 would be tax free???
Thanks Peter
Right - you are withdrawing $2000 from a registered plan. If it is directly from an RSP you get a T4RSP slip. If it is from an RSP through a RIF you likely get a T4RIF slip and I suspect it would follow a similar pattern, likely with differing line numbers involved.
Right again - the first $2000 of the $8000 would be deductible.
I have yet to fill out a tax form with this $2000 deduction so am not sure what lines are applicable. My tactic will be to complete my TurboTax return and see what I am paying. Then I will remove the $2000 and see what I am paying. If there is a difference then I need to determine what extra lines/forms need to be filled out.
Greg
10:02 am
December 12, 2009
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For everyone else reading this thread, to clarify in simple terms, one has to convert their RRSP to a RRIF by December 31st in the year in which they turn 71, according to my Scotia iTRADE statements.
Fortunately for me, that date is still 41 years away. 
Good discussion, though, on drawing down an RRSP before converting it to a RRIF. I believe you can also earn up to $69,000 (roughly) each (in a dual income household) before Old Age Security even starts to be clawed back. At which point, I question if that person even needs Old Age Security at all? This may start a bit of a lively debate, but I think lowering the clawback threshold to start at $50,000 each is much better than raising the eligibility age to 67. Another thing I hate to see is when foreign nationals have come to Canada and now receive both a foreign government social welfare pension (not an earned one, like CPP) and Old Age Security. To curb that, I'd raise the eligibility for OAS to having been in Canada for 20 years instead of the current 10 or require foreign nationals now permanent residents/dual citizens to choose either their foreign pension or OAS (not both). Old Age Security is meant for low- and moderate income seniors. 
Anyone agree with me?
Cheers,
Doug
12:16 pm
December 23, 2011
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Good discussion, though, on drawing down an RRSP before converting it to a RRIF.
o That is something every RRSP contributor needs to plan for, no matter what your age is. The sooner you have a plan and know when to start, the better. Younger folks need to look at how the TFSA fits into your portfolio and in hindsight for me (if there was a TFSA) I would have maxed it out before I contributed to an RRSP.
I believe you can also earn up to $69,000 (roughly) each (in a dual income household) before Old Age Security even starts to be clawed back.
o Point taken BUT there is GIS too not to mention many other Provincial and Federal programs that will use clawbacks based on any of your income such as pension, interest and etc.
At which point, I question if that person even needs Old Age Security at all?
o OAS is something we have all looked forward to (and earned) AND most companies that have pensions always included OAS as part of your expected pension earnings.
This may start a bit of a lively debate, but I think lowering the clawback threshold to start at $50,000 each is much better than raising the eligibility age to 67.
o Point taken
Another thing I hate to see is when foreign nationals have come to Canada and now receive both a foreign government social welfare pension (not an earned one, like CPP) and Old Age Security.
o That is a touchy subject!!! Keep in mind that the Feds say we need immigration to fill the jobs Canada has to offer and to feed dollars into the OAS and CPP pensions. As long as the foreign pension amounts are taken into account for clawback.
To curb that, I'd raise the eligibility for OAS to having been in Canada for 20 years instead of the current 10 or require foreign nationals now permanent residents/dual citizens to choose either their foreign pension or OAS (not both).
o Point taken
Old Age Security is meant for low- and moderate income seniors. - See more at: https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/rrif/#sthash.ZntiOIB1.dpuf
o Disagree. It is meant for every Canadian and claw back is in place for the Canadians that are better off.
Just wait until you retire and are on that "fixed" income and you see every level of government putting their hands deeper and deeper into your pocket every year while doing next to nothing to control expenses while they keep dreaming up new projects to fund from tax payers that just shouldn't be!! Pretty soon you will be paying tax for flushing the toilet (that is if you are not on a water meter already).
Disclaimer: Point Taken = I don't agree or disagree
2:31 pm
February 22, 2013
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Oh, where to start ---
Planning ahead -- cannot be stressed enough for ALL ages. I didn't start to contribute to my RSP till I was 43. I was fortunate to be able to work lots of overtime, which we banked, pay off our mortgage earlier than planned, and picked good investment vehicles.
Clawbacks - people feel cheated, but if they don't need it, they don't need it.
Foreign nationals collecting CPP - we have retroactive treaties, I believe, with most other countries, where they will pay our pensions and we will pay theirs. Is it fair/equal? Likely not, but someone always has to be ahead, by definition. I feel fortunate to have been born in Canada.
Greg
8:36 pm
February 17, 2013
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When retirement hits and I no longer have employment income to top up my and my wife's TFSA, I'm thinking that it would be wise to withdraw from my RSP and put it in our TFSA's as income / interest generated under the TFSA umbrella is not considered income for clawing back OAS. That is why I'm encouraging the kids to focus more on TFSAs than RSPs. Haven't done the calculations on the tax implications, but if withdrawals are mandatory after 71, thinking it might be prudent to max it out and transfer it over. Just wondering what you think.
9:46 am
December 23, 2011
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Rick said
When retirement hits and I no longer have employment income to top up my and my wife's TFSA, I'm thinking that it would be wise to withdraw from my RSP and put it in our TFSA's as income / interest generated under the TFSA umbrella is not considered income for clawing back OAS. That is why I'm encouraging the kids to focus more on TFSAs than RSPs. Haven't done the calculations on the tax implications, but if withdrawals are mandatory after 71, thinking it might be prudent to max it out and transfer it over. Just wondering what you think.
No matter what you have to withdraw your RRSP or RRIF money eventually. You want to withdraw it when you are at your lowest taxable income. When you reach that lowest income you could begin to withdraw the largest amount of RSP funds to keep yourself in the tax bracket that you are already in.
Keep what you need and put the rest into TFSA and if any is left look at investing in dividend (lower taxed) income.
There are more clawbacks out there than OAS or GIS ..... you want to max out for sure in TFSA and leave that to perhaps the last money you will ever use.
Depending on each of your kids situations ... they should first max out on TFSA and then look at RRSP. BUT must be fully aware of RRSP taxation and how to manage it as soon as they retire.
In my case I am on a pension, received severance pay, early CPP. Hindsight tells me I should have left the CPP until 65 and begun to buy down my RRSP.
Please write your comments in the forum.