Thank you to Passiv for sponsoring today’s video! Join here for FREE:
➡️RRSP To RRIF Conversion:
➡️Withholding Tax Rates:
➡️Our New Channel!
If you have any further questions about this video’s topic or any financial planning questions in general, I encourage you to find a certified financial planner in your area or book a consultation with us to get your retirement plan on track. You can learn more about our services at
Financial Resources I personally recommend:
➡️Retirement Income for Life: Getting More without Saving More (Second Edition):
➡️Parallel Wealth Masterclass:
➡️Future Value Calculator:
➡️Neo Mastercard – no annual fee and average 5% back! –
➡️Free Credit Report with Borrowell:
➡️Maximize your Savings with EQ Bank –
The above affiliate links are provided for your convenience. If you click on a link and end up purchasing a product or service, this channel may receive compensation for the referral. We have personal vetted each product and service we provide links to.
OUTLINE
0:00 – RRSP vs RRIF
1:20 – Multiple RRSPs/RRIFs
2:20 – Spousal RRSPs
2:52 – Withholding Tax
7:18 – Passiv
9:14 – Pension Income Tax Credit
This presentation is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter. Every effort has been made to ensure the accuracy of its contents. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Returns are not guaranteed and past performance may not be repeated.
—————————————–
DISCLAIMER: The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adam Bornn is not registered to provide investment advice and as such does not provide recommendations – those looking for investment advice should seek out a registered professional. Adam is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades….(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Understanding The RRSP To RRIF Conversion
Saving for retirement is an essential part of planning for our financial future, and one popular investment vehicle in Canada is the Registered Retirement Savings Plan (RRSP). While RRSPs offer individuals tax advantages during their working years, they must eventually be converted to a Registered Retirement Income Fund (RRIF) once the account holder reaches a certain age.
The conversion from an RRSP to a RRIF is a significant milestone in one’s retirement journey, as it marks the transition from accumulating retirement savings to receiving a steady stream of income in retirement. Understanding the RRSP to RRIF conversion process is crucial for Canadian investors, as it affects their retirement income and taxation.
So, what exactly is an RRSP to RRIF conversion? And what factors should investors consider when making this transition?
An RRSP is designed to help Canadians save for retirement by allowing contributions to grow tax-free until funds are withdrawn. However, the government wants to ensure that individuals use their RRSPs for retirement purposes. To enforce this, they require RRSP holders to convert their savings to a RRIF or another qualifying vehicle by the end of the year in which they turn 71.
A RRIF is an extension of an RRSP, with a key difference being that withdrawals from a RRIF are mandatory, unlike the optional withdrawals from an RRSP. Once the conversion is complete, the account holder can withdraw a minimum amount annually, as determined by the government, based on their age and the value of the RRIF.
The minimum withdrawal amount is calculated using a formula based on the account holder’s age or their partner’s age, as applicable. The intent behind this requirement is to ensure that retirees receive steady income in retirement and don’t deplete their retirement savings too quickly.
While the minimum withdrawal amount is mandated, RRIF holders have the flexibility to withdraw more than the minimum if desired. However, additional withdrawals are subject to taxes, and it’s crucial to be mindful of the impact on overall taxation.
One significant advantage of the RRIF over an RRSP is the continued tax-deferred growth potential. Investments held within a RRIF can still grow tax-free until they are withdrawn. This allows retirees to potentially benefit from further investment growth while receiving regular income. However, it’s important to note that any withdrawals from the RRIF are taxable as income in the year they are received.
When converting an RRSP to a RRIF, it’s crucial to consider several factors. Firstly, investors must assess their retirement income needs and determine the appropriate withdrawal amounts from the RRIF. This decision should be based on factors such as lifestyle, expenses, healthcare costs, and other sources of income.
Additionally, individuals should evaluate the investment mix within their RRIF. As retirement income is the primary objective at this stage, some investors may choose to shift their investments to a more conservative portfolio, focusing on capital preservation and regular income generation, over aggressive growth.
Lastly, it’s essential to monitor the tax implications of RRIF withdrawals. Unlike RRSP contributions, RRIF withdrawals are fully taxable as income. Therefore, individuals must plan their withdrawals strategically to minimize the tax burden. This may include spreading withdrawals over multiple years, considering income-splitting strategies with a partner, or employing other tax-efficient techniques.
In conclusion, the conversion from an RRSP to a RRIF is a critical step in retirement planning for Canadians. By understanding the conversion process and considering factors such as retirement income needs, investment mix, and taxation, individuals can ensure a smoother transition and maximize the benefits of their retirement savings. Seek guidance from a financial advisor or tax professional to navigate this process efficiently and enjoy a financially secure retirement.
Another wonderful and educational video. Thank you, Adam.
I have a question: I turn 65 on December 29. Which date is the earliest I can move $2000 from RRSP to RRIF?
As I have zero RRSP can I set one up convert it to a RRIF the SAME year and withdraw 2K in the same year from the RRIF to utilize the pension deduction on taxes as I'm 'of senior age'
If someone already has a defined benefit pension income that is =>$2000, it would not increase the pension income tax credit by withdrawing money from RRIF.
Great video! Thank you for the great, useful information!
Your videos are so informative — thank you!
great explanation – thank you Adam!!
Don't think you explained what a withholding tax is
Is that the tax you owe on the withdrawal as income?
If they withhold more than you end up owing at the end of the year, do you get a tax refund?
Why convert at 65 when the funds could continue to grow tax free still and you can take later?
I'm 68 and I invested 10,000 CAD into RRSP GIC for 5 years. What will happen to this GIC after I will be 71 y.o. ? Thanks !
Does the attribution rule apply to RIFFs as well as RRSPs? My wife's RRSP is a spousal RRSP and I am the contributor. I have set up a RIFF for her but have not funded it from the RRSP yet. If the attribution rule applies to RIFFs does the three year wait period commence from when I set up the RIFF or from when the RIFF is funded?
Started collecting Quebec Pension at 60, but continued working 5 or 6 months a year, started drawing OAS at 65. Decided to stop drawing EI then, kept working 3 or 4 months a year till 69. Then converted my RRSP to a RRIF and started drawing from it. Never reached any thresholds, and got a nice tax return every year, even got GIS.
It's the year in which you turn 65 not being age 65 or older for the pension tax credit.
If I am 65 and still working and continue to contribute to my RRSP, am I still qualified for the $2000 RRIF withdrawal tax credit?
Great video as usual. Thanks Adam and thank you to all people that posted questions and answers very useful information!!
Adam, help!
What is the most cost effective way to transfer my yearly RRIF withdrawal to Europe?
Service charges for exchanging and transferring funds from Canada to Portugal are outrageous!
one more question, can i have the $2000 tax credit at 65 years old for EACH of my pension benefits ( LIF, RRIF and Fixed-term Annuity). In this case, a total of $6K.
If i convert my rrsp to rrif, since there is only a minimum withdrawal requirement, does that mean i can withdraw any amount as my maximum? I know this will result in a maximum (30%) withholding tax. Just wondering if i can do this any amount of withdrwals. My objective is to empty the rrif within 5 years for example.
Hey Adam,great video. Question, I accidentally overcontributed to my RRSP and I was wondering how do I pay the penalties? I know its 1% per month and I will withdrawal the amount I overcontributed. Do you have any videos on this? Oh ya I did go over the $2,000.
Can you also make a video on different scenarios of using RRSP & RRIF if you retire earlier than 65?
Quite interesting! One thing I could not find anywhere – when drawing from RRSP in several chunks thru the year, does bank keep track of your previous withdrawals and apply higher withholding tax rate on your later withdraws?
Thank you!