More on RRIF Minimum Withdrawals

(from the Budget)

Age of RRIF holder or spouse	Previous RRIF Withdrawal %	New RRIF Withdrawal %
Under Age 71	1 / (90 – age)	1 / (90 – age)
71	7.38	5.28
72	7.48	5.40
73	7.59	5.53
74	7.71	5.67
75	7.85	5.82
76	7.99	5.98
77	8.15	6.17
78	8.33	6.36
79	8.53	6.58
80	8.75	6.82
81	8.99	7.08
82	9.27	7.38
83	9.58	7.71
84	9.93	8.08
85	10.33	8.51
86	10.79	8.99
87	11.33	9.55
88	11.96	10.21
89	12.71	10.99
90	13.62	11.92
91	14.73	13.06
92	16.12	14.49
93	17.92	16.34
94	20.00	18.79
95 and over	20.00	20.00

• Basically, if you have (for example) a $1mm RRSP at age 71 and convert it to a RRIF, your minimum withdrawal will now be $52,800 of taxable (T4) income vs. $73,800 from the previous RRIF withdrawal calculation.
• You will eventually have to pay income tax on your withdrawals, but you can now reduce the tax burden on receiving this money, potentially lengthening the deferral.
• Remember: RRSP contributions can be helpful if you receive a deduction in high income earning years and are in a lower tax bracket when you take it out.
• The new withdrawal rules will be helpful in managing your income levels in the future (and hopefully reducing taxable income in later years).

The budget proposes to reduce the RRIF minimum withdrawal rates for taxpayers age 71 and over to reflect the

longer life spans of Canadians and existing investment return rates. These measures will be effective for the

2015 and subsequent taxation years.

If a taxpayer has already withdrawn more than the new reduced minimum amount, they will permitted

to re-contribute the excess amount up to the previous minimum back into their RRIF. The deadline for

recontributions is February 29, 2016 and the amount will be deductible for the 2015 year. Similar rules will apply

to taxpayers receiving annual payments from a defined contribution RPP or PRPP.

• In no way should this take precedence over TFSA contributions.
• With the new limits, earning tax free growth/income on greater amounts with no tax consequences on withdrawal, the TFSA should be the first vehicle to utilize.
• Further, when the budget is passed, you will be allowed to add another $4500 for 2015 to bring your contribution to $10,000 total:

Year	Annual	Cumulative
2009	$5,000	$5,000
2010	$5,000	$10,000
2011	$5,000	$15,000
2012	$5,000	$20,000
2013	$5,500	$25,500
2014	$5,500	$31,000
2015	$5,500 + $4,500	$41,000
2016	$10,000	$51,000