Fantastic job, clear and easy to understand everybody should be at least watching this to learn the right way to do things. We need more people like you.
Meltdown still can be effective with going into a Non-Reg. In fact in this example I forgot to highlight that they are maxed out on TFSA except for this year, so very similar boat to you :)
Thanks for the video. I already figured this out a long time ago. I've been winding down our RRIFs so they will be closed when I hit 80 which is 6 years from now. I'm taking > 2 X the minimum each year. I pension-transfer to the wife so her income equals the OAS clawback threshold. ($86,912 for 2023. $90,997 next year). My OAS is completely eliminated regardless of any RRIF income, so this way she keeps getting the max OAS. Of course, I also max out our TFSAs each January. One of the last things my father told me before he died was to get rid of my mother's RRIF before she went, so as to avoid that tax hit on the final return, and he was a math teacher. (Calculus and spherical trigonometry at the Canadian Forces Aerospace college).
Great vid Chad. I think the key phrase you mentioned is "change of mind set". As well, I think you have to be aware of your marginal tax brackets. This is key to understanding how this works, and too many people don't understand this basic concept. We are following the plan you made for us and feel quite comfortable as iit's working just as predicted. Keep up the good work.
As you take money out of your RRSP/RRIF account then come the following January 1 put whatever the maximum amount you would acquire back into TFSA. You would have to hold that money in a cash account for a month if withdrawal from RRSP/RRIF occurred in December so you are out of the market for only 1 month at the most.
The advantages of the meltdown without TFSA room certainly diminish, however a non-registered account is still quite flexible. I will explore the breakeven on this more in the future, thanks for the comment :)
A bit confusing. The tax consequences of adding to to income are measured with the marginal tax rate. It seems the average tax rate is interesting but irrelevant regarding the meltdown. Also, while the OAS clawback above about 90k is another 15% added to the marginal rate, it is not the only punishment... The "age amount" tax credit is reduced by every dollar above about 35k adding even more tax to the marginal rate. Also, if we are already maxed out in TFSA, there is no room to add a RRSP meltdown below the CRA limit. In Canada no good deed goes unpunished.
You shouldn’t have to convert your rrsp into a RIF. but rather leave your money in your rrsp and withdraw it as needed instead of taking out money whether needed or not as with a RIF. That seems fair to me since the govt will tax what is left anyway.
Very good video Chad. ⭐⭐⭐⭐ Really drove home the overall tax advantage on estate however I would have liked to see keeping this comparison using average tax rate, as using the marginal rate kind of exaggerates the overall impact since average tax rate is considerably lower. Paying 53.53% on estate would only happen if you took other income already over the 53.53% threshold amount in that year prior to death. IE if you died in January taxes would be considerably less than 53.53% on the total estate however still an unpleasant amount to pay to the government.
Very true! When planning around estate in particular I do tend the be quite conservative using ~50%, but my thinking is always that I'd always want to be over prepared. Thanks again for the comments :)
@@ChadWiebeK4 I understand conservatism (potentially because of holding a professional association membership certification), but the problem I have with it built into so many different aspects of a plan is the conservatism then becomes so obscure and hard to understand or quantify the plan itself starts to suffer. I would rather build a separate identifiable amount or percentage into a plan in the event of X happening so it much more easily to see, understand & quantify. I also agree with under promise and over deliver concept which does kind of make conservatism a requirement for plans spanning decade though too (oh the balancing act--- lol). Thanks.
Great video! Simple explanation and at a pace that’s easy to follow and understand. Thanks for putting this together!
You are very welcome :)
Fantastic job, clear and easy to understand everybody should be at least watching this to learn the right way to do things. We need more people like you.
Thank you very much :)
Excellent video, and very well explained. Nicely done 👍
Glad you liked it!
I already maxed out my TFSA payments for both of us. Also have RRSP , a spousel and mine.
Meltdown still can be effective with going into a Non-Reg. In fact in this example I forgot to highlight that they are maxed out on TFSA except for this year, so very similar boat to you :)
Thanks for the video. I already figured this out a long time ago. I've been winding down our RRIFs so they will be closed when I hit 80 which is 6 years from now. I'm taking > 2 X the minimum each year. I pension-transfer to the wife so her income equals the OAS clawback threshold. ($86,912 for 2023. $90,997 next year). My OAS is completely eliminated regardless of any RRIF income, so this way she keeps getting the max OAS. Of course, I also max out our TFSAs each January. One of the last things my father told me before he died was to get rid of my mother's RRIF before she went, so as to avoid that tax hit on the final return, and he was a math teacher. (Calculus and spherical trigonometry at the Canadian Forces Aerospace college).
Thanks for the info, yeah I think it was fair to trust his math wow!
Are you using "Snap Projections" retirement planning software?
Great vid Chad. I think the key phrase you mentioned is "change of mind set". As well, I think you have to be aware of your marginal tax brackets. This is key to understanding how this works, and too many people don't understand this basic concept. We are following the plan you made for us and feel quite comfortable as iit's working just as predicted. Keep up the good work.
Thank you, and great to hear :)
Clear and concise examples of a key element to retirement planning. Thanks!
Glad it was helpful!
When is the best time to start the meltdown? Do you need to have a minimum about? And do you need to be accredited?
As soon as possible, the longer the time period the better. No minimum needed and nope to needing to be accredited
Great explanation but ? About TFSA room (allowance). How does one implement RRSP meltdown with no TFSA allowance (TFSA maxed out already) ?
As you take money out of your RRSP/RRIF account then come the following January 1 put whatever the maximum amount you would acquire back into TFSA. You would have to hold that money in a cash account for a month if withdrawal from RRSP/RRIF occurred in December so you are out of the market for only 1 month at the most.
The advantages of the meltdown without TFSA room certainly diminish, however a non-registered account is still quite flexible. I will explore the breakeven on this more in the future, thanks for the comment :)
A bit confusing. The tax consequences of adding to to income are measured with the marginal tax rate. It seems the average tax rate is interesting but irrelevant regarding the meltdown. Also, while the OAS clawback above about 90k is another 15% added to the marginal rate, it is not the only punishment... The "age amount" tax credit is reduced by every dollar above about 35k adding even more tax to the marginal rate. Also, if we are already maxed out in TFSA, there is no room to add a RRSP meltdown below the CRA limit. In Canada no good deed goes unpunished.
Awesome video Chad 👍
Glad you enjoyed it!
Damn. I clicked the thumbnail because I thought it was the Angry Videogame Nerd.
I do like videogames, so does that count? BOTW anyone?
Great video.
Thanks!
Whatever happened to just needing the money?
You can’t take it with you.
so true!
You shouldn’t have to convert your rrsp into a RIF. but rather leave your money in your rrsp and withdraw it as needed instead of taking out money whether needed or not as with a RIF. That seems fair to me since the govt will tax what is left anyway.
I like this idea
@@ChadWiebeK4Then contact the finance minister and tell her to change the law.
Very good video Chad. ⭐⭐⭐⭐
Really drove home the overall tax advantage on estate however I would have liked to see keeping this comparison using average tax rate, as using the marginal rate kind of exaggerates the overall impact since average tax rate is considerably lower. Paying 53.53% on estate would only happen if you took other income already over the 53.53% threshold amount in that year prior to death. IE if you died in January taxes would be considerably less than 53.53% on the total estate however still an unpleasant amount to pay to the government.
Very true! When planning around estate in particular I do tend the be quite conservative using ~50%, but my thinking is always that I'd always want to be over prepared. Thanks again for the comments :)
@@ChadWiebeK4 I understand conservatism (potentially because of holding a professional association membership certification), but the problem I have with it built into so many different aspects of a plan is the conservatism then becomes so obscure and hard to understand or quantify the plan itself starts to suffer. I would rather build a separate identifiable amount or percentage into a plan in the event of X happening so it much more easily to see, understand & quantify. I also agree with under promise and over deliver concept which does kind of make conservatism a requirement for plans spanning decade though too (oh the balancing act--- lol). Thanks.