RRIF - income splitting | RRSPs and RRIFs | Discussion forum

Everything I have read says that once you turn 65, you can split your RRIF income with your spouse. I don't see any need to wait until next year. Generally speaking, with CRA, various rules refer to the year in which you turn a certain age as applying to the whole year.
I don't think you would necessarily BOTH have to do the conversion, unless you wanted to. If you are splitting it, then the money is only going to move in one direction. The recipient doesn't have to convert or be of any particular age to receive.
You can split up to 50% of it.
You BOTH have to fill out Form T1032 when you do your income tax, but you don't have to do anything in advance. There is withholding tax, which CANNOT be reduced at source in view of intention to split.
"The withholding tax that applies to this income must be assigned in the same proportion as the income itself. Clients can decide on an annual basis how much income they wish to split." I think the assignation refers to filling out your tax forms.
Thus, you can dicker with the percentage each year to make it come out where you want it.
When both parties are 65, they can both claim the pension income credit of $2000, even if one of them only has this income from splitting (assuming it is not already being claimed from another eligible source).
If you are paying tax in instalments, you can base the instalments on intention to split.
If your withholding tax is greater than what it will be in the end, you might consider making the withdrawal at the end of the year. Consider what you are intending to do with the remaining money in the RRIF before you do the conversion, as it may affect when you decide, precisely, to do it.
Quotes and ideas from The Boomers Retire, 3rd edition, by Lynn Biscott, pp.189ff. This is a solid book, written for financial planners as well as lay people.

hdubya said

Loonie's answer is excellent.

You may want to take a look at this website as well:
http://retirehappy.ca/are-you-.....e-pension/

I noticed that the website says you can take advantage of the tax credit if you are at least 55 and receiving pension income. I did not know that. Does that mean if I collect my company pension at 61, I'll be able to claim the benefit for 10 years????

I don't believe there is any tax-free withdrawal directly from RRSP, ever. You have to pass it into a RRIF first, to get the pension tax credit, which effectively nullifies the tax on that amount. Be careful about how you make your withdrawals.
Yes, company pensions count for the $2000 deal, so you would not have to use RRIF for that purpose.