When I retired I put all of my RRSP into a RIFF. First thing I do early each January is take out a lump sum of cash and put it into maximize my TFSA for the tax year.
Other then giving the government a 10% loan on your money every year thats an ok plan. It would be more tax efficient for you to take the money out of your RRIF in December. Both vehicles allow tax free growth inside the account. So its better to let it grow in the RRSP all year then put it in the TFSA at the end cause of withholding tax
I took all my money and RRSP's and RRIF's and moved to Mexico now instead of a 100 percent clawback on my OAS I get my full OAS and interest rates in Mexico pay about 10 percent instead of 4.5 percent on a GIC in Canada. My tax advisor told me to move to Mexico.
With Mexico there is another “advantage” that you may or may not have “planned” for 😊 which is you might suddenly be made to Exit straight to Heaven or hell - as the case may be - with each & every account known to man or country settling immediately, no questions asked. And one more thing, do not buy or drive any expensive cars - with that 10% GIC invested money - in or around beaches. Just the tires could do you in.
But you'd have to live in Mexico. And that is a problem. Can you vote there? Do you speak faultless Spanish? Violence and crime toward fat, easy money Northerners is well known. And if you wanted to return to Canada a couple of times a year, well, that means travel. I'm retired and hate traveling. House is paid for, the house and property makes up over half of my investment/inheritable wealth. Which means watching this investment is easier while living in it all year round. If I didn't own my house or my RRSP was much bigger (it's under 100 thousand gross) then maybe your proposal makes more sense. Also, I have a wife, 4 adult children and 4 grandkids -- why would I want to move away from them?
Thanks again Adam. Very useful information for Canadians. I’ve been telling as many people as I can about your channel so they can get the information needed to take the confusion out of retirement planning.
Another great video Adam!! 🤩 Especially appreciate your comments on the tax implication of moving more $$ to RRIF to avoid pre-tax payments on your withdrawal - this is especially true if you are still working, contributing to ur RRSP and at age 65 you want to take advantage of the ‘free’ $2k pension income. Thx 🎉
It's good to remember that if your spouse is younger, you can use their age to calculate your minimum amount. The lower the age, the lower the minimum amount and the less income tax you’ll pay on the withdrawals.
what? you're upside down on your math, the tax you owe is based on your income, not your withdrawals. Think of withholdings as if they were payroll withholdings.
When I turned 71, I converted all of the RRSP investment to cash. Then instead of creating an RRIF, I purchased a Registered Life Annuity from an insurance company. I had a 8 month waiting period and then I got a monthly amount from the insurance company that was 8.1% annually of the amount I gave to the insurance company with taxes taken off at the source....for the rest of my life. There are other types of annuities other than a Life Annuity but they pay less. Because an annuity is an insurance product, most financial planners don't actually recommend them. The beauty of a Life Annuity is that one will never outlive their money as it gets paid for the rest of your life. I purchased another annuity at age 75 (non registered) and because interest rates are higher now than 4 years ago, I am getting 10.1% of the amount given to the insurance company and there is no tax deducted by the insurance co. Instead I pay the tax on this Life Annuity when filing my income tax return.
An important note on the witholding tax for Quebec. While it's true that the federal withoulding rate is lower for Quebec, a 14% Quebec witholding tax is also applied on top of it. Per example, if you retire 10,000 from your RRSP, an amout of 10% Federal + 14% Provincial with be witholded for tax on the payment (total of 24%). Also, for a RRIF, the 14% witholding tax also does not apply on the minimum redrawal.
Hi Adam, you're helping me out each and every day. I just read in a finance magazine that there is a delayed annuity now available through Desjardins. Is this something that you could do a video on? It feels like something that may be advantageous for those of us that will struggle to efficiently withdrawal our RRIF/ RRSP.
Kenamp1, see my recent post about Registered Life Annuity. Desjardins is one of several insurance companies that offer annuities. I have a Registered Life Annuity instead of an RRIF with BMO and another non registered Life Annuity that I bought at age 75 from Desjardins.
Just about all of the same principles apply except for the fact that LIFs have maximum payments as well. For that reason, take that maximum before you take anything more than your RRIF minimum. There are also a variety of ways to "unlock" part or all of your LIRA.
It's not worth it to me to convert to a RRIF. Single, so can't income split. No fees from my bank for withdrawing. I am only 57 and plan to withdraw each December when I will know my total income for the year. I don't pay tax at source on my DB pension and the withholding tax will more than cover my tax obligation for the year. I set aside 15% from my pension each month just in case something unexpected happens, this ends up being "spare" money that can be used elsewhere. Most of the money I withdraw from my RRSP each year will be put into my TFSA accounts. This will be my first year of RRSP meltdown...hopefully I've calculated things properly lol. Between now and 60 or 65, this will be the lowest income years of my retirement, so believe this is the best time for me to withdraw from my RRSP before I start collecting CPP and OAS.
Apparently changing to a rrif versus withdrawing straight from an RRSP you have less fees. And possibley get the 2k savings, but you mentioned no fees with your bank, never hurts to double check. In the past I've not always been given the most accurate info. Beat of luck , sounds like you're right on track 🎉🎉🎉🎉🎉
I changed my RRSP into a RIF at 64, just before I turned 65. Now I am withdrawing small amounts and getting the $2000 tax credit. Because I don’t actually need that money to live, I put it into my TFSA. Saving for my next car.
I have a defined benefit pension plan that I split with my wife to keep both of us in the lowest tax bracket. I also have a RIF and when I started drawing from it I tried to split it with my wife also and CRA did not allow that. I notice that you said that RIFF income can be split just like regular pension income. What gives? This is not a problem for us as we don't need to split the RIFF income in order to keep both of us at the minimum tax bracket but we are close and it may become a problem in the not too distant future as RIFF payments are force to increase. Bob in Ottawa
I am in my middle 60s. My work pension, cpp and oas covers all that I need, except maybe a car in the future. When 71, I'll open a rrif and just take the bare minimum out yearly, cause I don't need it yet. Not a huge amt in there anyway. And I will be inhereting some money soon. I don't trust stocks etc. So gics probably. Any advice? Am single. Remember 50% of people are divorced. Plus my TFSA is maxed out.
For some (like myself) who have an employer sponsored group plan that follows them into retirement, it's best to transfer into a RRIF only what you're going to withdraw within that year. The reason being that in most cases, those group plans will have lower managing fees than an individual RRIF account. Group plans are put in place as a work benefit to help employees save during their career, so withdrawal accounts are obviously not part of that umbrella.
Thank you for another awesome video Adam !!! I had know idea that a RRIF could be treated as a defined benefit. This will certainly help in keeping money in my pocket . So I have one question ..... If someone retires at 65 years young and converts say $12,000.00 from a RRSP to a RRIF , Can you income split the RRIF with your wife if she is already collecting CPP but is one year younger at 64 years old ?
Both my wife and myself are retired and with what we get from pension sources we do not a have enough income to pay taxes. The question how much income do I have to start paying Taxes and how does that relate to withdrawing from a RRIF?
Is there any benefit to melting down your RRSP early if you are already at the highest marginal tax bracket and expect to continue to be so throughout your retirement? In that situation, wouldn’t you be best off deferring the conversion to a RRIF until the last possible moment to benefit from the ongoing tax deferred investment income?
Great video once again. I was planning on converting to a RIFF this year ( 60) and starting to withdrawals From it, but my advisor said not to convert. I was planning on takiing the minimum until 65 when my Bridge benefit drops off from my Defined Benefit Pension. My advisor talked me out of as he says theres no fees to W/ D from the RRSP ( or RIFF) . Thing is that withdrawal will have a withholding tax. I really see no point in keeping the money in the RRSP...yes i understand that once converted, im committed to minimum withdrawals, but that's the point of spending money during GoGo years. I have no clue why he wants me to keep the money in the RRSP...
@@ZREXER1250regardless of whether the money is in an RRSP or a rrif, the trailer fees are the same so the advisor isn't making more money by keeping it in the rrsp
@ZREXER1250 I'm not sure, but this is a large investment company I'm with. I suspect that the more money the company holds, the greater the advisors bonus is and the more money they can lend out and make more off my money, just like the banks. Thing is I'm going to get taxed from either withdrawal..one will have a withholding tax, the other is income tax..I pay either way..early or later in the year.
Why not go back and ask what is the reason for keeping it in an RRSP ( the fee thing is a red herring)? He should be able to articulate why so you have a clear understanding. If he can’t then either your suspicions are founded or he doesn’t know. Could be he’s a good investment advisor but doesn’t know much about withdrawal strategies.
Interesting as always. What about continuing to contribute to a RRSP while taking a RRIF? I know once it's converted to a RIFF, no further contributions are allowed to the RRIF, so to my mind, you want to also keep and contribute to an active RRSP until 70, assuming you have the funds.
Hi, I’m 57 and want to retire in Dec 2025 at 58. I have a decent amount of saving, 75% of it in a DCPP and 25% in a RRSP. Do I have to convert those fund into RRIF next year in order to disburse my fund? Is there an advantage of putting both together of should I keep it separate? Should I cash in one before the other? My goal is to cash in 5% or 6% each year. Thanks
Am I correct to think that the only advantage of converting to a RRIF before 65 is avoiding withholding tax and any small withdrawal fees? I’m not clear on why I would only want to convert some of my RRSP to a RRIF?
You are correct. Before 65, if you convert your rrsp to a rrif, the main benefit is avoiding the deregistration fee charged by your financial institution on each transaction. After 65, the additional income splitting and pension income credit are available.
Withdrawing more then minimum at 60. = 3.33% Can we instruct financial institution to withhold more tax at this point. Not just on the difference between min and actual amount.
You need earned income that qualifies for RRSP contributions or unused prior contribution room to be able to make RRSP contributions. But in your example you are effectively withdrawing RRSP money and re contributing to RRSP --- why not just leave RRSP money alone in the first place as you are just burning RRSP room. Nothing else.
Hey Adam, love the videos, I have friends in BC I’ve told about you and they have become subscribers and even made appointments with you for advice as they retired! My question is, where is the best place to put money in the 7-8 years before retirement? I.e., due to changing jobs over the years, I have two LIRA’s, different financial institutions, five RRSP’s (matching at work, three different financial institutions, CAN & USD accounts), and two separate TFSA accounts (again, different financial institutions…). Can I, should I, be transferring all these to one institution? can LIRA’s be combined, etc., to simplify it all leading up to retirement in 2031-‘32? Thanks!
It depends how much complexity you like tracking all those separate accounts. My wife was in a similar situation and we consolidated all her accounts at one institution that had the most flexibility and control for us. Note that if you have any funds with the insurance companies (Sun Life, Manulife, etc) these are usually in segregated funds and have to be cashed out to make a transfer. So you or your advisor will have to rebuild your portfolio. LIRAs can be combined and usually the best strategy is to take advantage of the unlocking option and transfer as much as your province allows into your RSP before you convert your LIRA into a LIF.
Question: Have about $200k in RRSP's Selling my second business for around $5million. When the business sells, I'll have a way higher tax bill; much higher tax bracket in retirement if living off interest. For now, I can reduce myself on payroll down to almost nothing and draw down RRSP's. ShouldI start my RRSP meltdown now and save on taxes before my big cheque comes in ?! Thanks! Edit: I'm turning 55 this year , hubby 51.
Do you have a TH-cam to help a Canadian who moved to the USA for marriage in he 30s and who is now divorced and wants to return to live in Canada as soon as she turns 66 and becomes eligible for US social security?
how does it work if I wanr to buy an annuity with my RRIF funds? does the Annuity reside inside RRIF? and the annuity payments are withdrawn each month and the withholding tax taken each month?
For me i have always been a low income earner now being 64 its sad, but i have less than 20000 total and as mentioned being a low wage earner cant really add into my RRSP any idea of what i should do?
im sorry but you have to tell people the truth - your withdrawals from your rrsp will be worth nothing! i have a pension, my withdrawald are taxed 33% ok but the govt claws back your CPP and OAS. My rrsp withdrawals cost me 53%. making them worth half what i expected
Can anybody clarify how the $2000 tax credit works when you withdraw from RRIF? Do you get tha tax credit at 60 or only at 65? The 2k is a tax credit or just first 2000 withdraw from RRIF is free of tax? Seems that nobody on youtube does provide a clear answer to tjis RRIF advantage... sorry Adam but even you are missing explainig this topic
You should google this and look at the government of Canada website... On that site there is a 3 step questions form whereby it will give you the answer if you have eligible pension income and therefore may claim the pension income amount. To claim the pension income tax credit you have to have eligible pension, superannuation of annuity payment on your income tax return. When considering only RRIF withdrawals it would appear those dollars are not eligible pension income unless you were 65 years of age or older at the end of the tax reporting year. The federal tax credit is equal to $300 ($2000 *15%) and there may be a provincial benefit amount as well. The above being said if you have a defined benefit pension plan benefit you can claim the pension income tax credit whenever you start receiving that DB benefit. You can also split the DB income amount with your spouse to lessen the tax liability.
Only at age 65. It states it clearly on your income tax form. It's called Pension Income. RRIF income equals Pension Income, along with other income from pensions, but doesn't include RRSP income.
You get it at 65 from a RRIF. But you can also get it before 65 if you're getting a company pension. It's a non-refundable tax credit up to a maximum of $2,000.
@@Tulip90XE T4RSP box 16 (Annuity Payments) received upon death of a spouse line 12900 is what government of Canada website says is eligible income if you are under age 65. So if the RRSP income isn't this and you're under 65 I would guess you shouldn't be claiming pension income tax credit unless you have other eligible income. If no other eligible pension credit income then you're just lucky your return hasn't been audited to this point. Normally your RRSP withdrawals are going to be in box 22 on T4RSP (not eligible for pension tax credit).
Sell you PR, take your money from all accounts ,, transfer to a bank account in the states, keep getting your pension, move to a warm climate. CRA can sck a big one. Silly paper tiger.
Began withdrawing from my RRIF at 57. Will be completely melted down by 70. I don’t know why people get in a twist over the withholding tax. It’s simply a down payment on taxes. At the end of the year it’s a wash.
@@ilikeshroomgals No. My RRIF payments are monthly. I supplement my monthly DB pension income with them. My point about the withholding tax is that you pay no more or no less in taxes. The deal is you withhold less and may owe taxes at year end or you withhold more and may get a refund. I have more withheld and get small refunds, but that’s a personal choice.
I'm retiring in March and that is going to be my situation as well. DB and RRIF until, OAS perhaps 65+ depending on numbers, then the increased CPP at 70. Makes sense to me.
The withholding tax, which can be substantial, is money taken out of your RRIF instead of it being able to generate investment income for you. Sure you don't pay any more tax because of it but you are potentially losing a whole year's worth of investment income or gain for nothing.
As far as I know you can convert a RRSP to a RRIF as early as age 55, not at ANY age as is stated in the video (so age 55 to age 71). For most people it's academic but for those FIRE people if you are expecting to start your retirement when you are 50 or whatever a RRIF isn't an option, you'll be making withdrawals directly from your RRSP.
Yes, I read that a couple days ago. I’m 53 and a financial planner is running numbers for me, he figures I should start drawing significant sums from my RRSP. I don’t know if minimum withdrawals are required from 55 years old or not
@@gene6867 There are minimum withdrawal rates once you set up a RRIF but it's under 4% to age 65. If your planner is recommending you withdraw "significant sums" from your RRIF it shouldn't be a problem, you can withdraw more than the minimum whenever you like. I retired and set up my RRIF at age 61, pushed off CPP & OAS. to age 70 (started last year), and lived off of our RRIFs. The minimum RRIF withdrawal never came up as something to worry about and still hasn't.
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire without any investment. Retirement becomes truly fulfilling when you possess two essential elements: financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement. .
Sadly, CRA seems to force the financial institutions to quickly ramp up the withholding tax to the max (30%) when you're taking out monthly withdrawals, even if they are smaller, i.e. under $5K (after you have gone over the minimum yearly withdrawal amount). And yes, I know I'll get $$ back in the form of a refund but I hate that I'm basically loaning my money back to the government.
This really well explained… thank you. I am 55 and this information is really helpful. Adam do think TFSA contribution limit could potentially increase in future… $6500 to $10000 maybe?
I have a question for you. If you set up a RRIF and using your example, move $10,000 to the RRIF from your $200,000 RRSP so that you can withdraw the $10,000 without withholding taxes, do you not have to still pay withholding taxes as you are taking 100% of your RRIF out (so well above the small annual % amount for a RRIF? I thought any withdrawals above the annual amount would have withholding tax taken.
You should be able to leave your money in your RRSP and take out what you want depending on your circumstances in any year rather than being forced to take out a minimum amount in a rif starting at age 71. That would be a true self directed RRSP.That seems fair to me and that is what people should be talking about and trying to get the law changed so you get to choose when you withdraw your money.The remaining sum is taxed at the full marginal rate when you die anyway.
Do you have "decumulation" calculator? It will be useful so, say, you start taking 5% out of a rrif nest of $250k, the remainder $245k will still generate interest of say 3%. This will show you how much money is left at say 70, 80 etc
Uh. Maybe it's because I don't have enough info, but I understand that all funds in RRIF is considered income by our dearest leaders and taxed as such. I am converting my RRSP funds into TFSA so I just pay 10% for the big guy
When you withdraw funds from EITHER an RRSP or RRIF, the financial institution managing it will withhold tax based on how much you are withdrawing....anywhere from 10% to 30%.
Government of Canada sucks at explaining the withholding tax…had no idea it was a progressive tax and on above the minimum amount of RRIF withdrawal. Seriously, they suck!!! Thanks Adam
When I retired I put all of my RRSP into a RIFF. First thing I do early each January is take out a lump sum of cash and put it into maximize my TFSA for the tax year.
Other then giving the government a 10% loan on your money every year thats an ok plan. It would be more tax efficient for you to take the money out of your RRIF in December. Both vehicles allow tax free growth inside the account. So its better to let it grow in the RRSP all year then put it in the TFSA at the end cause of withholding tax
I took all my money and RRSP's and RRIF's and moved to Mexico now instead of a 100 percent clawback on my OAS I get my full OAS and interest rates in Mexico pay about 10 percent instead of 4.5 percent on a GIC in Canada. My tax advisor told me to move to Mexico.
How much exit tax did you have to pay when you left? I would think that would negate any other savings, no?
With Mexico there is another “advantage” that you may or may not have “planned” for 😊 which is you might suddenly be made to Exit straight to Heaven or hell - as the case may be - with each & every account known to man or country settling immediately, no questions asked. And one more thing, do not buy or drive any expensive cars - with that 10% GIC invested money - in or around beaches. Just the tires could do you in.
Did you denounce Canadian citizenship?
But you'd have to live in Mexico. And that is a problem. Can you vote there? Do you speak faultless Spanish? Violence and crime toward fat, easy money Northerners is well known.
And if you wanted to return to Canada a couple of times a year, well, that means travel. I'm retired and hate traveling. House is paid for, the house and property makes up over half of my investment/inheritable wealth. Which means watching this investment is easier while living in it all year round. If I didn't own my house or my RRSP was much bigger (it's under 100 thousand gross) then maybe your proposal makes more sense. Also, I have a wife, 4 adult children and 4 grandkids -- why would I want to move away from them?
I thought you had to live in Canada to receive OAS?
Thanks again Adam. Very useful information for Canadians. I’ve been telling as many people as I can about your channel so they can get the information needed to take the confusion out of retirement planning.
5:42 Great Advice : I've always been focused on investments inside my self directed RRSP and TFSA ,
but almost totally ignored tax issues .
Another great video Adam!! 🤩
Especially appreciate your comments on the tax implication of moving more $$ to RRIF to avoid pre-tax payments on your withdrawal - this is especially true if you are still working, contributing to ur RRSP and at age 65 you want to take advantage of the ‘free’ $2k pension income. Thx 🎉
It's good to remember that if your spouse is younger, you can use their age to calculate your minimum amount. The lower the age, the lower the minimum amount and the less income tax you’ll pay on the withdrawals.
what? you're upside down on your math, the tax you owe is based on your income, not your withdrawals. Think of withholdings as if they were payroll withholdings.
When I turned 71, I converted all of the RRSP investment to cash. Then instead of creating an RRIF, I purchased a Registered Life Annuity from an insurance company. I had a 8 month waiting period and then I got a monthly amount from the insurance company that was 8.1% annually of the amount I gave to the insurance company with taxes taken off at the source....for the rest of my life. There are other types of annuities other than a Life Annuity but they pay less. Because an annuity is an insurance product, most financial planners don't actually recommend them. The beauty of a Life Annuity is that one will never outlive their money as it gets paid for the rest of your life. I purchased another annuity at age 75 (non registered) and because interest rates are higher now than 4 years ago, I am getting 10.1% of the amount given to the insurance company and there is no tax deducted by the insurance co. Instead I pay the tax on this Life Annuity when filing my income tax return.
When you pass is there anything to will to a loved one?
@@Sable-r7c NO, not with a Life Annuity but there are other types of annuities.
@@Sable-r7c I don’t think so, just the amount they save and invest from their annuity payouts
An important note on the witholding tax for Quebec. While it's true that the federal withoulding rate is lower for Quebec, a 14% Quebec witholding tax is also applied on top of it. Per example, if you retire 10,000 from your RRSP, an amout of 10% Federal + 14% Provincial with be witholded for tax on the payment (total of 24%). Also, for a RRIF, the 14% witholding tax also does not apply on the minimum redrawal.
Hi Adam, you're helping me out each and every day. I just read in a finance magazine that there is a delayed annuity now available through Desjardins. Is this something that you could do a video on? It feels like something that may be advantageous for those of us that will struggle to efficiently withdrawal our RRIF/ RRSP.
Kenamp1, see my recent post about Registered Life Annuity. Desjardins is one of several insurance companies that offer annuities. I have a Registered Life Annuity instead of an RRIF with BMO and another non registered Life Annuity that I bought at age 75 from Desjardins.
this was a good video, do you have a LIRA and LRIF video as well ?
Just about all of the same principles apply except for the fact that LIFs have maximum payments as well. For that reason, take that maximum before you take anything more than your RRIF minimum.
There are also a variety of ways to "unlock" part or all of your LIRA.
It's not worth it to me to convert to a RRIF. Single, so can't income split. No fees from my bank for withdrawing. I am only 57 and plan to withdraw each December when I will know my total income for the year. I don't pay tax at source on my DB pension and the withholding tax will more than cover my tax obligation for the year. I set aside 15% from my pension each month just in case something unexpected happens, this ends up being "spare" money that can be used elsewhere. Most of the money I withdraw from my RRSP each year will be put into my TFSA accounts. This will be my first year of RRSP meltdown...hopefully I've calculated things properly lol. Between now and 60 or 65, this will be the lowest income years of my retirement, so believe this is the best time for me to withdraw from my RRSP before I start collecting CPP and OAS.
Sounds like you have a good plan, well done!
@@pablopiquante3227thanks. I hope so!
Apparently changing to a rrif versus withdrawing straight from an RRSP you have less fees. And possibley get the 2k savings, but you mentioned no fees with your bank, never hurts to double check. In the past I've not always been given the most accurate info. Beat of luck , sounds like you're right on track 🎉🎉🎉🎉🎉
I changed my RRSP into a RIF at 64, just before I turned 65. Now I am withdrawing small amounts and getting the $2000 tax credit. Because I don’t actually need that money to live, I put it into my TFSA. Saving for my next car.
You shouldnt have to convert it into a rif but be able to withdraw money as needed not as ordered.
I have a defined benefit pension plan that I split with my wife to keep both of us in the lowest tax bracket. I also have a RIF and when I started drawing from it I tried to split it with my wife also and CRA did not allow that. I notice that you said that RIFF income can be split just like regular pension income. What gives?
This is not a problem for us as we don't need to split the RIFF income in order to keep both of us at the minimum tax bracket but we are close and it may become a problem in the not too distant future as RIFF payments are force to increase.
Bob in Ottawa
I am in my middle 60s. My work pension, cpp and oas covers all that I need, except maybe a car in the future.
When 71, I'll open a rrif and just take the bare minimum out yearly, cause I don't need it yet. Not a huge amt in there anyway. And I will be inhereting some money soon. I don't trust stocks etc. So gics probably. Any advice? Am single. Remember 50% of people are divorced. Plus my TFSA is maxed out.
I also have a paid off home as well.
As previously stated, I am in my middle 60s. I get cpp and oas.
For some (like myself) who have an employer sponsored group plan that follows them into retirement, it's best to transfer into a RRIF only what you're going to withdraw within that year. The reason being that in most cases, those group plans will have lower managing fees than an individual RRIF account. Group plans are put in place as a work benefit to help employees save during their career, so withdrawal accounts are obviously not part of that umbrella.
Many thanks for your great insight 🙏👍
Wow, some people made pretty good investments by having millions in their RRSP!
Thank you for another awesome video Adam !!! I had know idea that a RRIF could be treated as a defined benefit. This will certainly help in keeping money in my pocket . So I have one question ..... If someone retires at 65 years young and converts say $12,000.00 from a RRSP to a RRIF , Can you income split the RRIF with your wife if she is already collecting CPP but is one year younger at 64 years old ?
Yes once you turn 65 you are able to split income with your spouse. The spouse's age is irrelevant as the test is against your age.
Both my wife and myself are retired and with what we get from pension sources we do not a have enough income to pay taxes. The question how much income do I have to start paying Taxes and how does that relate to withdrawing from a RRIF?
I own rentals, so I'm already going to be taxed a good amount...let alone adding RIF income to it.
Is there any benefit to melting down your RRSP early if you are already at the highest marginal tax bracket and expect to continue to be so throughout your retirement? In that situation, wouldn’t you be best off deferring the conversion to a RRIF until the last possible moment to benefit from the ongoing tax deferred investment income?
Why do you contribute to RRSP if you are not anticipating a reduction in your tax bracket at retirement?
@@Larry_Kabberga Immediate tax break from the contribution and deferring taxes on investment gains until I eventually withdraw funds from the RRSP.
Great video!
Why would it be beneficial, from a tax perspective, to withdraw more than the minimum ?
Great video once again. I was planning on converting to a RIFF this year ( 60) and starting to withdrawals From it, but my advisor said not to convert. I was planning on takiing the minimum until 65 when my Bridge benefit drops off from my Defined Benefit Pension. My advisor talked me out of as he says theres no fees to W/ D from the RRSP ( or RIFF) . Thing is that withdrawal will have a withholding tax. I really see no point in keeping the money in the RRSP...yes i understand that once converted, im committed to minimum withdrawals, but that's the point of spending money during GoGo years. I have no clue why he wants me to keep the money in the RRSP...
@@ZREXER1250regardless of whether the money is in an RRSP or a rrif, the trailer fees are the same so the advisor isn't making more money by keeping it in the rrsp
He doesn’t want you to convert because you’re then committed to withdrawals and that equals less $$ for him every year.
@@petramoser9233 sounds like the op is going to withdrawl anyway so it's moot. Try again
@ZREXER1250 I'm not sure, but this is a large investment company I'm with. I suspect that the more money the company holds, the greater the advisors bonus is and the more money they can lend out and make more off my money, just like the banks. Thing is I'm going to get taxed from either withdrawal..one will have a withholding tax, the other is income tax..I pay either way..early or later in the year.
Why not go back and ask what is the reason for keeping it in an RRSP ( the fee thing is a red herring)? He should be able to articulate why so you have a clear understanding. If he can’t then either your suspicions are founded or he doesn’t know. Could be he’s a good investment advisor but doesn’t know much about withdrawal strategies.
Interesting as always. What about continuing to contribute to a RRSP while taking a RRIF? I know once it's converted to a RIFF, no further contributions are allowed to the RRIF, so to my mind, you want to also keep and contribute to an active RRSP until 70, assuming you have the funds.
There is no advantage to doing that.
what income are you contributing to the RRSP with? Are you working until 70?
Hi, I’m 57 and want to retire in Dec 2025 at 58. I have a decent amount of saving, 75% of it in a DCPP and 25% in a RRSP. Do I have to convert those fund into RRIF next year in order to disburse my fund? Is there an advantage of putting both together of should I keep it separate? Should I cash in one before the other? My goal is to cash in 5% or 6% each year. Thanks
Am I correct to think that the only advantage of converting to a RRIF before 65 is avoiding withholding tax and any small withdrawal fees? I’m not clear on why I would only want to convert some of my RRSP to a RRIF?
You are correct. Before 65, if you convert your rrsp to a rrif, the main benefit is avoiding the deregistration fee charged by your financial institution on each transaction. After 65, the additional income splitting and pension income credit are available.
Withdrawing more then minimum at 60. = 3.33%
Can we instruct financial institution to withhold more tax at this point. Not just on the difference between min and actual amount.
I am in that 1% that is making more retired than when I was employed, do you have an example for that
Same here, congrats!
Yes I would like to see that.
As a non-resident what is the withholding tax?
I'm doing it too
If you retire at 55 and convert your RRSP to a RRIF, can you take your RRIF withdrawl and make an RRSP contribution with it?
You can put it in a tfsa if you want it to keep growing tax free.
Why would you want to do that? You are just going to be taxed again when you withdraw it from your RRSP. Better off in a TFSA.
You need earned income that qualifies for RRSP contributions or unused prior contribution room to be able to make RRSP contributions. But in your example you are effectively withdrawing RRSP money and re contributing to RRSP --- why not just leave RRSP money alone in the first place as you are just burning RRSP room. Nothing else.
I put 5 k a year into rrsp to help with my taxes
good info.
Thanks!
Hey Adam, love the videos, I have friends in BC I’ve told about you and they have become subscribers and even made appointments with you for advice as they retired!
My question is, where is the best place to put money in the 7-8 years before retirement? I.e., due to changing jobs over the years, I have two LIRA’s, different financial institutions, five RRSP’s (matching at work, three different financial institutions, CAN & USD accounts), and two separate TFSA accounts (again, different financial institutions…).
Can I, should I, be transferring all these to one institution? can LIRA’s be combined, etc., to simplify it all leading up to retirement in 2031-‘32?
Thanks!
It depends how much complexity you like tracking all those separate accounts. My wife was in a similar situation and we consolidated all her accounts at one institution that had the most flexibility and control for us. Note that if you have any funds with the insurance companies (Sun Life, Manulife, etc) these are usually in segregated funds and have to be cashed out to make a transfer. So you or your advisor will have to rebuild your portfolio. LIRAs can be combined and usually the best strategy is to take advantage of the unlocking option and transfer as much as your province allows into your RSP before you convert your LIRA into a LIF.
Question: Have about $200k in RRSP's Selling my second business for around $5million. When the business sells, I'll have a way higher tax bill; much higher tax bracket in retirement if living off interest. For now, I can reduce myself on payroll down to almost nothing and draw down RRSP's. ShouldI start my RRSP meltdown now and save on taxes before my big cheque comes in ?! Thanks! Edit: I'm turning 55 this year , hubby 51.
Do you have a TH-cam to help a Canadian who moved to the USA for marriage in he 30s and who is now divorced and wants to return to live in Canada as soon as she turns 66 and becomes eligible for US social security?
how does it work if I wanr to buy an annuity with my RRIF funds? does the Annuity reside inside RRIF? and the annuity payments are withdrawn each month and the withholding tax taken each month?
If my RRSP is invested in US dividend stock which is free of the foreign resident tax and it will be converted to RRIF, is it still stays tax free?
If one, at age 65, can income split RRIF withdrawals with a spouse, does the same income splitting apply to LIFF withdrawals?
For me i have always been a low income earner now being 64 its sad, but i have less than 20000 total and as mentioned being a low wage earner cant really add into my RRSP any idea of what i should do?
If I decided to go back to work could I convert my RIF back to a RSP and stop the minimum withdraws?
Yes
In my 40's with a great Defined Pension plan at work, should I just withdraw all my RRSP's to pay off my house
We r both 68
2025 we have $80k tfsa room…. Should we take full amount out of rrsp pay taxes & put in tfsa?
All true, all correct, but nothing new here.
im sorry but you have to tell people the truth - your withdrawals from your rrsp will be worth nothing! i have a pension, my withdrawald are taxed 33% ok but the govt claws back your CPP and OAS. My rrsp withdrawals cost me 53%. making them worth half what i expected
Can anybody clarify how the $2000 tax credit works when you withdraw from RRIF? Do you get tha tax credit at 60 or only at 65? The 2k is a tax credit or just first 2000 withdraw from RRIF is free of tax? Seems that nobody on youtube does provide a clear answer to tjis RRIF advantage... sorry Adam but even you are missing explainig this topic
You should google this and look at the government of Canada website... On that site there is a 3 step questions form whereby it will give you the answer if you have eligible pension income and therefore may claim the pension income amount.
To claim the pension income tax credit you have to have eligible pension, superannuation of annuity payment on your income tax return. When considering only RRIF withdrawals it would appear those dollars are not eligible pension income unless you were 65 years of age or older at the end of the tax reporting year. The federal tax credit is equal to $300 ($2000 *15%) and there may be a provincial benefit amount as well.
The above being said if you have a defined benefit pension plan benefit you can claim the pension income tax credit whenever you start receiving that DB benefit. You can also split the DB income amount with your spouse to lessen the tax liability.
Only at age 65. It states it clearly on your income tax form. It's called Pension Income. RRIF income equals Pension Income, along with other income from pensions, but doesn't include RRSP income.
You get it at 65 from a RRIF. But you can also get it before 65 if you're getting a company pension. It's a non-refundable tax credit up to a maximum of $2,000.
I have taken money directly from RSP and always get the $2000 tax credit. You don’t have to convert to RRIF first
@@Tulip90XE T4RSP box 16 (Annuity Payments) received upon death of a spouse line 12900 is what government of Canada website says is eligible income if you are under age 65. So if the RRSP income isn't this and you're under 65 I would guess you shouldn't be claiming pension income tax credit unless you have other eligible income. If no other eligible pension credit income then you're just lucky your return hasn't been audited to this point. Normally your RRSP withdrawals are going to be in box 22 on T4RSP (not eligible for pension tax credit).
If the majority of someone's investments are non-reg vs rrsp/tsfa (due to limits) are they going to be in a bad position during retirement?
Sell you PR, take your money from all accounts ,, transfer to a bank account in the states, keep getting your pension, move to a warm climate. CRA can sck a big one. Silly paper tiger.
Began withdrawing from my RRIF at 57. Will be completely melted down by 70. I don’t know why people get in a twist over the withholding tax. It’s simply a down payment on taxes. At the end of the year it’s a wash.
Do you do the withdrawal at year end? Just to take advantage of said washings.
@@ilikeshroomgals No. My RRIF payments are monthly. I supplement my monthly DB pension income with them. My point about the withholding tax is that you pay no more or no less in taxes. The deal is you withhold less and may owe taxes at year end or you withhold more and may get a refund. I have more withheld and get small refunds, but that’s a personal choice.
@@murraytown4w😊 a
I'm retiring in March and that is going to be my situation as well. DB and RRIF until, OAS perhaps 65+ depending on numbers, then the increased CPP at 70. Makes sense to me.
The withholding tax, which can be substantial, is money taken out of your RRIF instead of it being able to generate investment income for you. Sure you don't pay any more tax because of it but you are potentially losing a whole year's worth of investment income or gain for nothing.
As far as I know you can convert a RRSP to a RRIF as early as age 55, not at ANY age as is stated in the video (so age 55 to age 71). For most people it's academic but for those FIRE people if you are expecting to start your retirement when you are 50 or whatever a RRIF isn't an option, you'll be making withdrawals directly from your RRSP.
Yes, I read that a couple days ago. I’m 53 and a financial planner is running numbers for me, he figures I should start drawing significant sums from my RRSP. I don’t know if minimum withdrawals are required from 55 years old or not
@@gene6867 There are minimum withdrawal rates once you set up a RRIF but it's under 4% to age 65. If your planner is recommending you withdraw "significant sums" from your RRIF it shouldn't be a problem, you can withdraw more than the minimum whenever you like. I retired and set up my RRIF at age 61, pushed off CPP & OAS. to age 70 (started last year), and lived off of our RRIFs. The minimum RRIF withdrawal never came up as something to worry about and still hasn't.
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire without any investment. Retirement becomes truly fulfilling when you possess two essential elements: financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement. .
Sadly, CRA seems to force the financial institutions to quickly ramp up the withholding tax to the max (30%) when you're taking out monthly withdrawals, even if they are smaller, i.e. under $5K (after you have gone over the minimum yearly withdrawal amount). And yes, I know I'll get $$ back in the form of a refund but I hate that I'm basically loaning my money back to the government.
This really well explained… thank you. I am 55 and this information is really helpful. Adam do think TFSA contribution limit could potentially increase in future… $6500 to $10000 maybe?
When was the last time a liberal government did something that benefited the middle class Canadians?
It's actually $7000 right now in 2024 and goes up in $500 lumps with inflation.
I have a question for you. If you set up a RRIF and using your example, move $10,000 to the RRIF from your $200,000 RRSP so that you can withdraw the $10,000 without withholding taxes, do you not have to still pay withholding taxes as you are taking 100% of your RRIF out (so well above the small annual % amount for a RRIF? I thought any withdrawals above the annual amount would have withholding tax taken.
Yes, you will pay withholding tax- he put a link below his video regarding withholding tax and he states this at about 8:48 in his video
You should be able to leave your money in your RRSP and take out what you want depending on your circumstances in any year rather than being forced to take out a minimum amount in a rif starting at age 71. That would be a true self directed RRSP.That seems fair to me and that is what people should be talking about and trying to get the law changed so you get to choose when you withdraw your money.The remaining sum is taxed at the full marginal rate when you die anyway.
Do you have "decumulation" calculator? It will be useful so, say, you start taking 5% out of a rrif nest of $250k, the remainder $245k will still generate interest of say 3%. This will show you how much money is left at say 70, 80 etc
I am from Quebec ….can u recommend a financial planner in Quebec
Very clear, thanks. 😊
You’re welcome 😊
Where can i buy one of those golf shirts ?
Under Armour!
what is you are still working past 71.
Uh. Maybe it's because I don't have enough info, but I understand that all funds in RRIF is considered income by our dearest leaders and taxed as such. I am converting my RRSP funds into TFSA so I just pay 10% for the big guy
You will be rudely disappointed!!
When you withdraw funds from EITHER an RRSP or RRIF, the financial institution managing it will withhold tax based on how much you are withdrawing....anywhere from 10% to 30%.
Government of Canada sucks at explaining the withholding tax…had no idea it was a progressive tax and on above the minimum amount of RRIF withdrawal.
Seriously, they suck!!!
Thanks Adam