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Updated 2mo ago.
Updated 2mo ago.
The RRIF is an account into which you convert your RRSP by December 31 of the year you turn 71. You must then withdraw a minimum amount each year, calculated based on your age. Withdrawals are taxable as income.
You are 72 years old and your RRIF holds $500,000. The mandatory minimum withdrawal at that age is 5.28%, which is $26,400. This amount is added to your other income (pension, OAS, CPP) and taxed at your marginal rate. You can keep the rest invested in ETFs like VBAL.TO.
The RRIF is the natural continuation of the RRSP in retirement. Understanding minimum withdrawals helps you plan your retirement income and minimize taxes. Withdrawing more than the minimum is allowed, but it increases your tax bill and may reduce your OAS benefits.