RRIF Withdrawal Reductions for 2020 | RRSPs and RRIFs | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

sp_Feed Topic RSS sp_TopicIcon
RRIF Withdrawal Reductions for 2020
May 9, 2020
7:37 am
Rodster
Member
Members
Forum Posts: 10
Member Since:
April 8, 2020
sp_UserOfflineSmall Offline

The Federal Government recently announced a 25% reduction in minimum RRIF withdrawals for 2020. My RRIF is self-administered through a major bank.

My online access indicates the bank have not updated their files for these new rules. Their telephone support people don't know when this will happen.

Anyone dealing with this same situation?

Another problem. I have two RRIFs with the same bank (both self-administered). The minimum RRIF withdrawals for both were set at the beginning of the year.

I withdrew more than the minimum from one RRIF and nothing from the other. With these new rules, if I had one RRIF, I would be able to reduce the minimum payment to 25% (since my withdrawal to date is less than the new minimum for both RRIFs).

But since I have two RRIFs, it looks like I'm stuck with my over earlier withdrawal. Any suggestions?

May 9, 2020
9:22 am
GICinvestor
Member
Members
Forum Posts: 529
Member Since:
April 26, 2019
sp_UserOfflineSmall Offline

Hi Rodster.

2 RRIFs at one bank. Don’t they both fall under the same account?

May 9, 2020
11:12 am
Rodster
Member
Members
Forum Posts: 10
Member Since:
April 8, 2020
sp_UserOfflineSmall Offline

GICinvestor said : Two RRIFs at one bank. Don’t they both fall under the same account?  

You'd think so. But each has it's own minimum payment based on the RRIF value at the beginning of the year.

I asked it they could be rolled into one RRIF and the opening RRIF value for the total of both RRIFs be used for the 2020 minimum withdrawal. Seems reasonable to me? So far, they have said no.

My thinking is to wait for them to update the RRIFs for the new government minimum payments and then raise the issue again.

But who knows? Someone on this forum may have a better idea?

May 9, 2020
12:26 pm
Norman1
Member
Members
Forum Posts: 3078
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

It is too late to combine the two RRIF's for this year's withdrawals.

The minimum withdrawal for each separate RRIF is determined by its market value at the beginning of the year. It doesn't matter if the separate RRIF's are with the same carrier.

The T2203 paperwork requires the transferor to pay the calculated minimum withdrawal of the RRIF being transferred out:

1. … If the RRIF property is transferred to another RRIF, RPP or PRPP, we [the transferor] have paid or will pay the annuitant the minimum amount for the year.

May 9, 2020
1:09 pm
Rodster
Member
Members
Forum Posts: 10
Member Since:
April 8, 2020
sp_UserOfflineSmall Offline

Norman1 said : The minimum withdrawal for each separate RRIF is determined by its market value at the beginning of the year. It doesn't matter if the separate RRIF's are with the same carrier.

  

Thanks Norman ...

That's a good answer. I had a look at T2033 and what you said was true. Pity.

May 9, 2020
1:50 pm
Norman1
Member
Members
Forum Posts: 3078
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

One can prepare for the RRIF withdrawal next year! sf-smile

For now, keep in mind that RRIF withdrawals can be in-kind. So, one doesn't necessarily have to sell in order to withdraw the minimum as cash.

One can withdraw the equivalent value in shares or mutual fund units and hold them in a regular account: In-kind RRIF Withdrawals (Minister of Finance 2008 letter)

May 9, 2020
2:40 pm
cruzinalong
Ontario
Member
Members
Forum Posts: 126
Member Since:
April 15, 2020
sp_UserOfflineSmall Offline

Rodster said

You'd think so. But each has it's own minimum payment based on the RRIF value at the beginning of the year.

I asked it they could be rolled into one RRIF and the opening RRIF value for the total of both RRIFs be used for the 2020 minimum withdrawal. Seems reasonable to me? So far, they have said no.

My thinking is to wait for them to update the RRIFs for the new government minimum payments and then raise the issue again.

But who knows? Someone on this forum may have a better idea?  

I have a RRSP and LIRA. Years ago I wanted to merge them into one RRSP. They said no. I probably will end up with a RRIF and LIF next year. One RRIF would appear to be easier for me to administer.

May 9, 2020
4:39 pm
pooreva
Member
Members
Forum Posts: 94
Member Since:
April 2, 2018
sp_UserOfflineSmall Offline

Norman1 said
One can prepare for the RRIF withdrawal next year! sf-smile

For now, keep in mind that RRIF withdrawals can be in-kind. So, one doesn't necessarily have to sell in order to withdraw the minimum as cash.

One can withdraw the equivalent value in shares or mutual fund units and hold them in a regular account: In-kind RRIF Withdrawals (Minister of Finance 2008 letter)  

You are saying if somebody has to withdraw from RRIF $5000, (s)he can withdraw 100 shares of company X in January, put it into non-registered account and cash it at will during the year (or whenever)?
What if those 100 shares are worth $7000 in December? Will (s)he declare it as capital gain if cashed in Dec.?

May 9, 2020
5:53 pm
Norman1
Member
Members
Forum Posts: 3078
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

pooreva said

You are saying if somebody has to withdraw from RRIF $5000, (s)he can withdraw 100 shares of company X in January, put it into non-registered account and cash it at will during the year (or whenever)?
What if those 100 shares are worth $7000 in December? Will (s)he declare it as capital gain if cashed in Dec.?

(S)he would be able to withdraw shares of company X in January that are worth $5,000 at the time withdrawn.

Yes, there would be $2,000 capital gain if those shares are later sold.

A better alternative, if the person had $5,000 of TFSA contribution room, would be to withdraw $5,000 worth of shares from the RRIF in January and contribute them immediately to a TFSA. When the shares are later sold for $7,000, the gain would be within a TFSA and be tax free.

May 9, 2020
6:30 pm
MG
Member
Members
Forum Posts: 87
Member Since:
February 16, 2013
sp_UserOfflineSmall Offline

cruzinalong said

I have a RRSP and LIRA. Years ago I wanted to merge them into one RRSP. They said no. I probably will end up with a RRIF and LIF next year. One RRIF would appear to be easier for me to administer.  

Hi Cruzin,
I am pretty sure that, once you hit 55 in Ontario, you can move 50% of your LIRA into your RRSP. The benefit of this is that the RRSP is more flexible in terms of when you can start to withdraw funds and the amount that can be withdrawn. LIRAs are more restrictive because there is an annual maximum withdrawal whereas you can withdraw your entire RRSP anytime (assuming you can handle the tax issues). This may or may not be important to you.

May 10, 2020
3:50 pm
pooreva
Member
Members
Forum Posts: 94
Member Since:
April 2, 2018
sp_UserOfflineSmall Offline

Norman1 said

pooreva said

You are saying if somebody has to withdraw from RRIF $5000, (s)he can withdraw 100 shares of company X in January, put it into non-registered account and cash it at will during the year (or whenever)?
What if those 100 shares are worth $7000 in December? Will (s)he declare it as capital gain if cashed in Dec.?

(S)he would be able to withdraw shares of company X in January that are worth $5,000 at the time withdrawn.

Yes, there would be $2,000 capital gain if those shares are later sold.

A better alternative, if the person had $5,000 of TFSA contribution room, would be to withdraw $5,000 worth of shares from the RRIF in January and contribute them immediately to a TFSA. When the shares are later sold for $7,000, the gain would be within a TFSA and be tax free.  

That is TOP NOTCH advise! Thank you Norman.

May 10, 2020
4:27 pm
Loonie
Member
Members
Forum Posts: 6072
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

However, if the shares were put into the TFSA, then fell to $3000 by December, and the individual had intended to withdraw the money as in the above example, they have lost $2000 in non-recoverable TFSA contribution room.

May 10, 2020
5:22 pm
Norman1
Member
Members
Forum Posts: 3078
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

If one thinks the shares will fall further, then one could wait until December to withdraw the $5,000 worth of shares. One would get more shares out of the RRIF at the lower price per share in December than in January.

Is there some sort of requirement to withdraw the entire RRIF minimum amount in one shot in January? I think one is allowed the entire year to withdraw the minimum amount for that year.

May 10, 2020
9:12 pm
cruzinalong
Ontario
Member
Members
Forum Posts: 126
Member Since:
April 15, 2020
sp_UserOfflineSmall Offline

Norman1 said
If one thinks the shares will fall further, then one could wait until December to withdraw the $5,000 worth of shares. One would get more shares out of the RRIF at the lower price per share in December than in January.

Is there some sort of requirement to withdraw the entire RRIF minimum amount in one shot in January? I think one is allowed the entire year to withdraw the minimum amount for that year.  

You can withdraw the minimum anytime during the year. I know people that withdraw in January. One friend withdraws monthly. Another withdraws the last day of the year. I have yet to make a decision.

Please write your comments in the forum.