What Happens to Your RRSP When You Retire? (Converting to a RRIF)

[@davidhughes6048]

Reese, your videos are some of the best out there. Well done, and thank you.

[@wellbuiltwealth]

Wow, thank you!😊

[@billyrock8305]

Excellent clearly presented summary. ✅ Terrific graphic illustrations as well. ✅

[@wellbuiltwealth]

Thank you kindly!

[@04forerunner]

Great info. Confirmed our plan for my wife’s RRIF for next year. It was with holding component I wasn’t clear on when using monthly payment option. Keep up the good work!

[@neilbertram1922]

I always go straight to new videos from Well Built Wealth 🙂 That was a really comprehensive overview. Probably the best I have ever seen. At 6:50 you showed a RRIF minimum withdrawal rate chart. It started at age 55. I have found that so many websites, calculators, and charts either state (or at least imply) that a RRIF cannot be started before age 55. It is my belief that a RRIF can be started before age 55, which might be very useful for people in certain situations (e.g. disability). And that the RRIF minimum percentage can be calculated by dividing 1 by (90 - age). You accurately mentioned that the only real requirement is that you do it BY age 71. But it's worth calling out the no minimum age. You mentioned that you can use your spouse's YOUNGER age to affect the RRIF minimum. I believe you can also use your spouse's OLDER age to affect the RRIF minimum if you want. Why would you do this? Well, increasing the RRIF minimum could be good if you need to get money out of a spousal RRIF without triggering attribution rules (since attribution rules do not apply on minimum withdrawals).

[@wellbuiltwealth]

You’re hired!

[@gerryclark4330]

Clear and straightforward. Great advice

[@wellbuiltwealth]

Thank you!

[@matthewfunk6658]

Love what you're teaching us, thank you so much!

[@wellbuiltwealth]

Thank you!! 🤓

[@glenngardin3561]

Excellent and timely video, Rhys! Thanks and hope you have a healthy and prosperous New Year!

[@rickbouwman3833]

Just came across this! Your videos are VERY well done and I love how succinct you are. Very pleasant to listen to and very good information for all. Subscribed!

[@wellbuiltwealth]

Thank you 🤓

[@humbleloonie]

Great content and delivery, Rhys! All the best to you and your channel!

[@wellbuiltwealth]

Thank you so much 😊

[@CorneliuBacauanu]

Excellent explanation. I did not know all these. Thank you.

[@AMG-BENZ-1]

Very happy to see that you’re now pumping out these videos almost weekly! Or perhaps I’m simply being selfish for expecting so much...😉

[@wellbuiltwealth]

Thank you! Won’t be able to do it all the time, but I’m trying!

[@msarimazi]

Thank you, I am learning so much! Your explanations are clear, simple and so easy to understand.

[@wellbuiltwealth]

Awesome :) Thanks 😊

[@JoeS1956]

l am in my third year of retirement and what l do each year is transfer around 10k from my RRSP to my RRIF account and then withdraw the entire 10k RRIF account in January. l have a Defined Benefit pension plan so the plan is to try and draw down my RRSP as tax efficiently as possible. l just prefer doing a lump sum, put the maximum back in to my TFSA and invest the remainder in a non registered account.

[@dswood302]

Smart move. I withdrew directly from my RRSP in December and paid taxes plus fees/GST to withdraw. I need to set up a RRIF and do as you do.

[@mpTraveller87]

Thanks this helps! Is there a minimum balance to keep in the RRIF? We have properties to sell and won’t always want to do this transfer

[@JoeS1956]

There is no minimum to keep in the RRIF l believe. Keep in mind that when the last surviving spouse passes, the entire amount left in the RRIF is taxable, so you don't want that to be a large sum of money going to the government. @@mpTraveller87

[@humbleloonie]

That's cool. Didn't realize you can open an RRIF account while still having your RRSP active.

[@wellbuiltwealth]

No minimum balance required. Depends on your institution I suppose, but not normally.

[@slyanover]

I'm 65 and I move money from my RRSP to my RRIF. When I withdraw from the RRIF I can pension split with my spouse. That reduces my income and allows us to both access the $2000 tax free pension amount. You can't pension split if you withdraw from the RRSP. Also I just move funds that I'm planning to withdraw and leave everything else in the RRSP.

[@jrdtheace]

no withholding is required on minimum amounts, well that's one big curveball. best part of this video!

[@KP-uj1wf]

Another great video... as always. Appreciate the work you put into these video to inform us retirees! Cheers

[@wellbuiltwealth]

Thank you!!

[@pargolf3158]

Great video. Thanks for the links. I found the pension credit link especially useful. FROM THE ARTICLE "The Pension Income Tax credit is available to you if you are 55 years of age or older. Basically, it enables you to deduct, from taxes payable, a tax credit equal to the lesser of your pension income or $2,000.00. Depending on which province you live in, this equates to $440-$720 in actual tax savings each year". COMMENT: I believe I have this right. If you retire at 55, even if you don't plan to convert your RRSP to a RRIF until age 71, you should convert (71-55)x $2,000 = $34,000 into a RRIF. Then you can pull out $2,000 per year for the next 17 years and benefit from the credit ( basically $2,000 tax free per year)

[@enatp6448]

Super helpful!

[@robsilva1831]

Excellent video, as always. I would be interested in a video discussing a scenario where a couple wants to retire early (55) using the 4% rule with a large RRSP (900K), TFSA (300K) and a taxable investment account of (200K). Specifically I wonder if the 4% rule is even feasible when the RRSP is converted to RRIF at 71 and the minimum withdrawal becomes 5.28%. What is the strategy there? Thanks again for your extremely informative videos!

[@wellbuiltwealth]

Thank you! And you’re welcome :) We don’t use the 4% rule in our planning as it isn’t really practical. Especially when dealing with registered accounts as you pointed out. But if you felt strongly about it, you could always reinvest the amount that you were forced to withdraw that was above 4%. But then, you gotta factor in taxes…

[@marcelmed4574]

Thank you for the information. One topic that never gets discussed in any video related to RRSP to RRIF conversion from my searches on KZbin, an idea for a future video and possibly you could explain this. Assume you have seven stocks in your RRIF that pay dividends with a yearly yield of 20K and you have requested the institution pay a monthly amount of $2K per month = 24K per year. Where does the additional 4K per year come from, who decides which stocks need to be sold to fund the additional 4K? Is the expectation that the individual has to track this and sell a certain stock to make up for the shortfall or does the institution decide on behalf of the individual which stocks get sold? Also, im not sure you are aware but your web-site under "fees" a message comes up with "page not found"??

[@wellbuiltwealth]

Hi there. If you have a portfolio manager, they will handle the sells for you. If it’s a self directed account, you’ll have to manage the sells that would be needed to make up the shortfall. If you do not, the platform may have a liquidation logic, but you’d have to inquire about the specifics. Not sure about the “fees” page. All our pages appear to be working from what we can see. But thanks for giving us a heads-up.

[@marcelmed4574]

@@wellbuiltwealth ok thanks.. sorry but based on your response it appears you are not really clear on many aspects on how RRIF payouts are handled as it relates to payout shortfalls. I asked the same question to another financial retirement planner on KZbin and the response I got was very detailed.

[@josephkeith6954]

Great vid. One of the most comprehensive info on RRIF. Is there any benefit having RRIF before 71 other than avoiding withholding tax for the min withdrawal amount (which we may be going to get some back anyway depending on tax bracket)? It’s a sin for CRA to tax people lump sum if one forget to convert RRSP to RRIF before 71.

[@wellbuiltwealth]

Thank you! I would say the main benefits are being able to set up automatic withdrawals and not being charged any admin fees on the withdrawals.

[@Waltznumber2]

@@wellbuiltwealth And most importantly, the Pension Tax Credit which you can only get from an RRIF from age 65 to 71

[@agis610]

Very nice support, but transfer from RRSP to RRIF must be gone till Dec.31, 2023 , if I want to transfer money from RRIF to cash and put to TAX 2023? OR is there some option to do till March 31 , 2024 and use this transaction to TAX 2023? Thank you

[@secordman]

Subscribed, well done, very clear.

[@sunysuny3030]

Perfect explanation, concise and simple ❤

[@dominiquetheeasyminimalist]

Excellent content, thanks! If I unlock my LIF, can I transfer it to a RRIF directly or does it have to be RRSP then RRIF?

[@wellbuiltwealth]

Usually, you can do it all at once. But double check with your institution :)

[@629990]

Can you do a video on options to increase the minimum withholding tax. I would prefer to base the withholding tax on my total income from all sources, rrsp, oas, cpp, other pension income.

[@wellbuiltwealth]

All you have to do is contact service Canada and let them know what you want to increase the withholding tax to.

[@ddtdcd]

I am 71 can I transfer partially the RRSP to RRIF?

[@mspeters1]

another great video rhys! Just to confirm, when you convert to a RRIF, is your money still growing within or does it just stop once you move over?

[@DoneByD]

it continues to grow with whatever you have invested it in...

[@mspeters1]

Thanks@@DoneByD

[@wellbuiltwealth]

Exactly!

[@JamesUmpherson]

What about the 4th Option? Taking a fixed amount of your RRSP on an annual basis and investing into a non-registered account prior to the mandated requirement to convert to a RRIF.

[@satinderbank4607]

Thanks for the informative content. I was wondering if you have multiple RRSP accounts (at different institutions) can you convert one RRSP into RRIF and leave others as RRSP - or di you have to convert ALL of them to RRIF at the same time ? Thx,

[@wellbuiltwealth]

Thanks! And yes. You can convert one at a time. No prob.

[@lesskarasz1737]

would you happen to have a copy of the spreadsheet that you have displayed at 6:15 in your video? Great video by the way!

[@wellbuiltwealth]

Thank you! At the timestamp you noted, I’m using a software program called Conquest. It is only available via advisors/firms that buy a subscription.

[@marieklyne2722]

My spouse and i are both over 65. He is working. I am withdrawing from my rsp to make a contribution to his rsp. I will pay minimal tax. He will move to a lower tax bracket. We need these funds to cover his tax bill that will still be owed. We are going to then transfer this rsp contribution to a rif and withdrawing it to make the tax pmt before april 30th. This withdrawl will then be split in 2024. Again i will pay mnimal tax, and we don't expect he wil continue to work. Do you see any flaws??

[@pargolf3158]

How long does your RRIF need to be in existance before you can withdraw the $2,000 to claim the pension credit. For example say I retired in 2022 and have a company pension. I then open a RRIF in mid December 2024 by transferring $5,000 from my RRSP. A week later I withdraw $2,000 from the RRIF I just opened, can I then claim the $2,000 pension credit when I file my income tax for the 2024 tax year? Or does the RRIF have to be open for the entire tax year for which you plan to take the credit? Thanks

[@Pkeats817]

So, transferring from RRSP to a RRIF is so that you can get a monthly payment for when retirement starts?

[@billyrock8305]

Exactly. You can decide how much and when you want to take the money. You must take the government tabled minimum depending on your age. You pay no withholding tax. Monthly payouts is most common way to receive your money.

[@Pkeats817]

@@billyrock8305 I have a Lira type account, labelled as RRSP and another “regular” RRSP. Would the Lira/RRSP need to be converted to an annuity to use it? Is there a minimum age to access that account? Can it be paid out monthly if it isn’t converted to an annuity? Thanks for your previous response. 🙂

[@humbleloonie]

@@Pkeats817 LIRA is also often referred to as Locked-In RRSP. It can be transferred to a LIF (similar to RRIF for RRSP) or an annuity. I think you can't make any withdrawal until age 55 (or it depends on your province) and you also need to convert it to a LIF by the end of the year you turn 71. Like the RRIF, the LIF can be withdrawn depending on your arrangement with the institution it is held. All the best!

[@Pkeats817]

@@humbleloonie Thanks! As far as I understand, I can transfer half out at 55. I don’t quite understand what happens to the remaining locked in portion in regards to how and when it will be used. Literally, how and when it will be paid out to me, is what I don’t quite understand, yet. 🙂

[@wellbuiltwealth]

If you look up some videos on LIRAs and LIFs that should help you. I have that on my to-do list but just haven’t got there yet :)

[@minimaxmiaandme.4971]

Excellent channel.....thank you!

[@martymendes1]

Thanks for another great video, Rhys. Question for you. My mom, age 78, has a RRIF account with one of the big banks. That account holds a bunch of long-term GICs. She asked what happens for her minimum withdrawal if there is no cash and no maturing GIC in the account. Where would the money come from for the withdrawal? The answer she got was that because it's in a RRIF account, they automatically sell a portion of the lowest yielding GIC to cover the distribution and that there is no penalty for breaking the term of the GIC and withrawing early. Does this make any sense? And if that is correct, shouldn't my mom always invest in the highest yielding GICs available, regardless of term? Thanks again.

[@davidhughes6048]

Having worked for a Big 6 bank I cannot recommend relying on their financial advice.

[@The786Aziz]

Your mom should ask the bank to cash out all GICs and reinvest them in the highest paying GIC which can be at least 5.6% for starters. Of course there are other investment options for her to consider

[@wellbuiltwealth]

Tough for me to comment on their policies. But if that’s been what they’ve been doing so far, then it’s likely what they do. So yes, get those rates as high as you can :)

[@RCML27]

That's what happens with my Mom's RRIF GICs at BMO and RBC. I don't know if it's coming out of the lowest yielding GIC or not because I didn't pay attention to that, but it is coming out of the GICs. Now I just want to know how they calculate the interest if the GICs haven't expired yet and my Mom passed away a month and a half ago? Do they pay interest till the date of death or since it didn't go till maturity they'll just give you back your principal only?

[@martymendes1]

Good question. I find it very curious that GICs are locked in products and yet, within a RRIF account, they're not! I'd have to the the math to see if they're paying out the full interest for the amount of time the money is invested, but it's complicated. Wouldn't be surprised if there are some obscure fee or charge factored in.

[@canadianjatti]

you can rrif at any age. that is my back up plan for if i am ever without employment for significant periods of time I will just rrif my rsp and start using that as income

[@Chucku153]

EXCELLENT VIDEO!!!THANKS

[@terrykennedy3335]

Great video but what I like to know is how to find the best RRIF interest rate right now my institution only pays 2.5% annually retires need info on where and how to get the best rates after all now is the time we need the most bang for our buck!

[@wellbuiltwealth]

Well, it’s hard to answer that question since there are so many different investment options available within a RRIF. But if you are wondering what the best GIC rates are (which you can hold in a RRIF), then you can simply Google it :)

[@garyfeser4294]

Simple and concise👌

[@mrslcom]

For someone who retires before age 65, what’s the advantage of using a RRIF rather than just withdrawing from a RRSP?

[@davidhughes6048]

I think most institutions will charge you for an RRSP withdrawal, but withdrawals from RRIFs should be part of the deal. Also, I could be wrong but I believe there is no witholding tax on the required minimum withdrawal from a RRIF.

[@wellbuiltwealth]

Bang on!

[@mikelynch896]

@@wellbuiltwealthbut you still would pay the same amount of tax on the next years income tax?

[@terrykennedy3335]

if it's a GIC then how can I have monthly withdrawals is that possible? I guess what I'm looking for is the best rate on a monthly withdrawal program to maximise my RRIF for long term use. Here is a scenario: 200K 25 years of retirement monthly withdrawals at the minimum. I surely don't want a 2.5% annual rate of return on my money that basically makes me nothing.

[@marcelmed4574]

@@terrykennedy3335 I’d suggest you consider an ETF that pays you a monthly dividend instead. I know of several great ones that pay around 10-12%. Make sure your monthly withdrawal is slightly lower vs the dividend as these dividends fluctuate by a small percentage every month. If it goes negative your institution will charge you penalty fees. No one in KZbin seems to discuss the withdrawal specifics on KZbin. This is the case if you have a self directed RIF.

[@rongrant3500]

And you can convert your RRSP into a RRIF, and then stat a new RRSP while pulling out RRIF. If you find you have extra money in a year, put it back into the new RRSP unit 71. (Assuming your TFSA is maxed out)

[@markwolovetz]

Why not just withdraw 5 k chunks from rrsp. No rrif required.

[@WONGOTech88]

Hi. Can you address Spousal RRSP/RRIF? My wife and I have personal RRSPs and Spousal RRSPs. Would my wife be the annuitant of my Spousal RRSP (i.e., can make withdrawals from my Spousal RRSP) and I am the annuitant of her Spousal RRSP? Or would I be the annuitant of my Spousal RRSP account which I can melt down along with my personal RRSP account? When I convert my RRSPs to RRIFs, do I convert my Spousal RRSP to a Spousal RRIF or to my new personal RRIF? On the one hand, if I am not the annuitant of my Spousal RRSP, then I would not be able to draw from my new Spousal RRIF? In this case, should my wife convert her Spousal RRSP and roll over the savings to my new personal RRIF so I can draw from my personal RRIF? On the other hand, if I am the annuitant of my Spousal RRSP and I convert it to a RRIF, does it have to be a Spousal RRIF or can my personal RRSP and Spousal RRSP be combined and the savings rolled over to a single personal RRIF? Do I need a Spousal RRIF? Thank you for your insight.

[@wellbuiltwealth]

This topic is in the queue!

[@jimjackson4256]

I hope you will encourage your listeners to contact the finance minister and ask her to let people keep their money in their rrsp and be able to withdraw money each year as they see fit rather than being forced to withdraw as mandated by the govt.

[@themightydecibel-heavymeta7130]

There is another option: retain as an RRSP and draw down what you want, whenever you want until age 71. That way you're not forced to take out a minimum.

[@DoneByD]

There may be associated fees for each withdrawal when withdrawing directly from your RRSP account, which isn't the case when coming from the RRIF.

[@BRASS8888]

would be great to have a video on what to do with your eligible RRSP contribution amount during the year you are retired. lets say you have earn in 2023 an rrsp contribution of $10 000 for 2024 . in 2024 you retire in March. you start converting your RRSP in a RRIF to start an RRSP meltdown to the first bracket of tax (around $50 000) . so it would make no sense to make the $10 000 contribution because the amount you would save in tax would be the same amount you pay (within the same tax bracket). so what do you do with the $10 000 eligible contribution you still have left . what are the options. thank you. also note that ALL eligible contribution to date have already been taken during the working life. so there is only the $10 000 left.

[@wellbuiltwealth]

Maybe I’m not understanding this correctly, but I’m thinking I just wouldn’t use it. We see people into retirement all the time with unused contribution room. Really, the bottom line is to use it when it makes sense. And ignore it when it doesn’t.

[@RCML27]

​@@wellbuiltwealthThat's what I've been doing. Ignoring it. I'm getting the QPP disability pension (similar to CPP disability pension) and I notice my RRSP contribution room increasing every year even though I've stopped working. I guess they use that disability pension to calculate your RRSP contribution room. I've also had to take my government defined benefit pension since I turned 60 since the insurance company that was paying me long term disability told me to at age 60. So together I'm getting $50,000 ($16K in QPP disability pension and $34K in a bridged defined benefit pension that drops to $24K at 65). Add in at least $7,000 in interest and dividend income and I'm into the 2nd tax bracket (same bracket as when I was working). So when and how should I melt down my $350K RRSP since I have health problems and don't want the government taking over half of it if I die early? Do I take enough out each year to have my total income just be under the 3rd tax bracket?

[@master15951]

Is Tax credit 2000$ is it every year I can claim ?

[@wellbuiltwealth]

Yup!

[@user-uz9bu7ti3d]

What happens to your RRSP/RRIF when you begin withdrawing is all of those dollars you locked away for a 30% tax break in the moment are taxed 100%. It isn't a savings plan, it is a gov't loan sharking scam. Best option is to forego an RRSP and invest in a taxable account with extreme discipline to not dip into it early. Taxable account is 100% cash.

[@wellbuiltwealth]

You should probably watch our video on how RRSPs work. It answers those questions :)

[@user-uz9bu7ti3d]

@@wellbuiltwealth RRSP's are the absolute worst thing to do with your cash. The gov't loan shark will give you $3,000 now if you lock up $10,000 in a RRSP now, and the loan shark will tax that entire $10,000 later in life, later when the tax rate is also likely higher than it was at the time. Not only that, the shylock will also tax 100% of everything you make on the $10,000. Oh, you made a capital gain? The gov't will tax 100% of it instead of 50% if it was not in the RRSP. Oh, you made CAD eligible dividends? The gov't will tax 100% of it instead of two-thirds. So, unless a person is completely desperate for that $3,000 loan and willing to pay massive shylock interest, RRSP is the worst thing you can do with your money. All an RRSP does is protect a person from their money if they are not disciplined.

[@joebender3662]

You should be able to leave uour money in your rrsp and not have to convert to a rif at age 71.That way you could remove money from your rrsp as you need it without a govt mandated minimum whether you need it or not.That would be a real self directed retirement plan as opposed to the govt imposed plan. That seems fair to me anyway.

[@wellbuiltwealth]

Totally agree.

[@joebender3662]

@@wellbuiltwealth Then contact the finance minister and get as many others as you can to do so as well.Only the finance minister can change the law and she wont unless prodded to do so.She could change the law in a minute if she wanted to. I think it is worth a little effort to potentially save thousands of dollars in some years depending on what else is going on with your finances in some years.At the end it is all taxed anyway.Thank you

[@Waltznumber2]

Check out the pension tax credit which can only be obtained from a RRIF from age 65 to 71.

[@joebender3662]

@@Waltznumber2 that is jice but what if you are 72 and up.What i am saying hold true.