RRIF withdrawals Pre Covid-19 no tax withhold amount vs new minus 25% minimum | RRSPs and RRIFs | Discussion forum

You have to withdraw the minimum payment the year after opening a RRIF. I think you will have a choice. If you do not need the old minimum take out the new minimum less 25%. I checked RRSP. Down a little since December statement.

Thanks for the reasoning. I will save this until late in year.

GICinvestor said
Thanks Loonie.

I think I am on target with the % as I won't take a mandatory withdrawal for age 70 but will for 2021 at age 71.

Good point about the beneficiary too!! Thanks!!

I think I have to refresh my beneficiaries with Oaken for both TFSA and RRSP/RRIF for both Home Trust and Home Bank or just OAKEN.

And of course I guess we all have to know what the value of our GIC's are as of Dec 31 every year to help determine what the mandatory amount will actually be.

But I still wonder with the 25% lower mandatory amount vs the old (pre Covid-19) original mandatory amount. Will the NO tax withhold threshold amount be the 25% lower amount or the old original amount?  

My parents had GICS in their RIFF. They took the minimum withdrawal amount. It is interesting how the FI cashed GICs. Say the total value was $100,000. The withdrawal rate 5.28%. $5,280. FI cashed GICS that paid the lowest interest rates first.

I have paid the required withholding tax when I withdrew funds from my RRSP over the last 15 years. The withholding tax has always been too much. When I filed my tax return in the spring I got a refund. One year my taxable income would be high. The next year taxable income would be lower. I had extra income from tax refund. I did not need to withdraw RRSP funds every year.

If you take the 75% option then no withholding tax. If late in the year you take out extra say 33.3% of first withdrawal then you may/may not pay withholding. Best to ask your FI for clarification. Everyone is UNIQUE. Remember this is a new change for all RRIF holders.

Just to be clear, if you are turning 71 in 2021 and plan to take a mandatory withdrawal in that year, your baseline rate for 2021 will be 5.00% because you were only 70 at the beginning of that year.

Sounds like a plan!

I have dealt with both Hubert and Oaken on this question.

Hubert is very easy to deal with, but I would advise, as a precaution, setting up the RIF cash account with no money in it and doing the beneficiary form before you convert. They will allow this. Confirm with them that they have rec'd the beneficiary form - takes several weeks in my experience. I put a sticky note on it asking them to email when rec'd, which they did. This provides you with verification.

I agree; Oaken is a PITA about this sort of thing, although I can see the reasoning. Because of their complex calculations as to where they draw the money from, it becomes very difficult, and too much work, to figure out what is going to happen and how much you will have in your various GICs at withdrawal, let alone end of year, if you want some precision.
Something to consider is to schedule your withdrawal dates to coincide with the anniversary dates for the GICs. This eliminates one level of confusion because you know what the balance wil be for determining the next interest payment without any mid-year withdrawals. But you may have other criteria that are relevant in deciding on the date.
I couldn't figure out any way to make it truly simple.

Yes, this is a good time to do it. Don't wait for bad weather or some mishap to get in the way. Fortunately, with these two FIs, you should be able to do it all without face-to-face. I don't think there is any advantage at all in waiting.

71 in 2020? then yes, 5.28 in 2021.

pooreva said
Since this is RRPS/RIFF sort of discussion, what you folks would advise in this situation.
Person (60 years old) was downsized this year (reorg) with no much chance to gain employment due to obsolete skills (IT mainframe developer).
Some emergency savings put aside for similar situations will take her through 2021; so she needs money to survive 2022-2025 whew CPP/OAS will kick in.
Should she start withdrawing from her RRSP or start taking from her 'main savings' money?
RRSP is banking stocks and good mutual fund; main savings are GIC.
Thanks!  

When I retired, I took funds from investments. Paid off loans. I took money from my RRSP when I needed it. Bills, travel whatever. CPP at 60. OAS at 65. If your income is low you collect GIS. It does not matter where the funds come from. Money is money. Everyone is UNIQUE.

GICinvestor said

Since this is RRPS/RIFF sort of discussion, what you folks would advise in this situation.
Person (60 years old) was downsized this year (reorg) with no much chance to gain employment due to obsolete skills (IT mainframe developer).

First be reassured it is not the end of the world. Similar happened to me 15 years ago, after 40 years of being a loyal employee at age 56.

Did the company offer counselling for re employment opportunities?

Was there severance?
Some can move to RRSP over and above the yearly limit.
Check the rules to find what the amounts are.

Was there a company pension?
Was their CPP bridged?

Did the person apply for employment insurance?

Person can apply for CPP at age 60.
What is their condition of health or life expectancy? Etc etc
There is lots to google about the pros and cons of taking CPP early.

If they take CPP early would their income at age 65 allow GIS along with OAS?

Some emergency savings put aside for similar situations will take her through 2021; so she needs money to survive 2022-2025 whew CPP/OAS will kick in.

See CPP comments above.

Should she start withdrawing from her RRSP or start taking from her 'main savings' money?

So I am 70 and don’t need to use any RRSP or RRIF. So my plan is to use non registered saving first and I continue to take a tax hit for withdrawing RRSP through RRIF (for tax deductions) and put those funds into TFSA and will also take more RRSP RRIF out to invest in GICs. So am trying to have lowest income in my 80’s.

But to answer properly some one needs to thoroughly analyze ALL their needs for expenses, rent, if owns home....property taxes etc, health insurance or self insure. So many things. And then decide what to spend first.

RRSP is banking stocks and good mutual fund; main savings are GIC.
Thanks!

Go more GIC? Turn on all interest to pay annually and use interest only to live on, if possible. They need some one to review everything before a decision is made.

BTW. After I was let go, a few months later I landed a good job for $60,000 a year.....worked 3 days.....quit.....and never looked for employment again.

  

You were born the same year as I was. 1949. When we worked a TFSA did not exist. You plan on using RRSP/RRIF for TFSA. I have no plans for creating TFSA yet. I will wait until I see how much I have with RRIF withdrawals. Enjoy the summer.

GICinvestor said
Ha ha. You did the math!

I have been pulling RRSP funds out via RRIF for quite a few years to fuel all our TFSAs. I will treat TFSA as though it was RRSP money. RRIF income is splittable with spouse and gives you the pension deduction on your taxes but I had that deduction any ways. I stay in the lowest income tax bracket and will reduce my income in the future years with the benefit of TFSA to boot. I only took enough for TFSA but should have taken all I could have to stay in the lower income tax threshold. Stupid me.....ie $4000 extra and not going to TFSA is only an interest hit vs the full taxable amount in my older age years of taxation. So I plan any RRIF withdrawals that are over what I need for TFSA will go into a $1000 GIC category/group/ label as ex RRIF. Plan to use Hubert 1 year GICs for the cashable option. I am thinking to get my income as low as possible and if any income benefits come my way.....would be good. But if all I do....in the long run will head off any much higher income and higher % taxation. And for estate purpose RRSP or RRIF without a successor becomes heavily taxed at death. Next year any new or renewed TFSA will have interest paid annually and as $1000 accumulates will become a $1000 TFSA GIC that is pure interest and when the day comes to use TFSA funds those pure interest GICs will be used first. So bye bye to Oaken for TFSAs.
You can begin to withdraw RRSP or RRIF pretty much any time after you retire into lower income.

So managing my RRIF withdrawals with the various rules per FI is something for me to have to learn how to manipulate......oh er....manage.  

I worked out how much to withdraw from RRSP to pay off TFSA each year. I did not bother. You are married. You can split certain types of income with your spouse. Company pension and CPP. I have some married friends. He said not many couples have two well paying incomes with company pensions. They save lots with income splitting.