Withdrawing from RRSPs before age 71? - Page 3
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Thread: Withdrawing from RRSPs before age 71?

  1. #21
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    OP here . Thanks for all the good info. (...kinda sucks getting old, don't it?...)
    Can someone clarify: Is there any difference -from a tax point of view - in withdrawing funds from an RRSP vs getting a payment from an RRIF (or a LIF, in my case)? Aren't they both taxed the same as income???

    Last edited by jargey3000; 2017-03-16 at 01:09 PM.

  2. #22
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    One thing to watch out for is that a direct RRSP withdrawal may have a withdrawal fee where other's have posted that their financial institution does not charge fees for RRIF payments.
    True!

    I'm well into claw-back territory and I want my RRIF to be very small at that time so as to minimize the penalty.
    If I decide to retire completely in couple of years, I'm planning to convert my Spousal RRSP into SRRIF and depends on income probably also convert RRSP to RRIF.
    First of all , there is no attrition rules for Spousal RRIFs for minimum withdrawals, so those withdrawals will be against my income, and not against my working spouse. My spouse will open another SRRSP and will continue to contribute all RRSP room available there.
    Thus before I hit 65 , my RRIFs will be smaller ... to avoid possible claw-back.
    What I don't understand.... there is no withdrawal maximum for RRIF, so what the difference if you withdraw from RRSP or from RRIF?

    p.s. while was typing,jargey ask same question

  3. #23
    Senior Member heyjude's Avatar
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    Quote Originally Posted by pwm View Post
    Good point. I have a company pension, so I already qualify for that, but the RRIF payment is also considered by CRA to be "Pension Income". Also, bear in mind that the $2,000 is really $4,000 for a couple, because each person claims it.
    Well, I am single and do not have a pension, so I make it my business to take advantage of any little break available to me, even if it is only $2000.
    Last edited by heyjude; 2017-03-16 at 01:30 PM.

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  5. #24
    Senior Member heyjude's Avatar
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    Quote Originally Posted by gibor365 View Post
    What I don't understand.... there is no withdrawal maximum for RRIF, so what the difference if you withdraw from RRSP or from RRIF?
    My understanding is that you can't withdraw from an RRSP unless you cash the whole thing in. I have done this with a GIC. But to set up recurring payments, you have to convert your RRSP to a RRIF. Of course, you could just take a chunk of your RRSP and convert it to a RRIF, and then you would have both.

  6. #25
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    Quote Originally Posted by heyjude View Post
    My understanding is that you can't withdraw from an RRSP unless you cash the whole thing in. I have done this with a GIC. But to set up recurring payments, you have to convert your RRSP to a RRIF. Of course, you could just take a chunk of your RRSP and convert it to a RRIF, and then you would have both.
    Not really, you can withdraw from RRSP any amount you want, the difference between RRIF and RRSP withdrawals that in RRIF case you HAVE TO withdraw every year at least minimum (and you won't pay withholding tax), in RRSP case you can withdraw any amount in any time period you wish (and you will pay withholding tax). But the bottom line both withdrawals will generate taxable income.

  7. #26
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    Ideal case , to withdraw minimum from RRIF that you will stay in the lowest tax bracket, and supplement this income with TFSA (but Trudeau reversed nice TFSA room increase)

  8. #27
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    Quote Originally Posted by pwm View Post
    When I hit 65 I converted my RRSP to a RRIF and started aggressive withdrawals. Two reasons:

    1). You can transfer 50% of the payment to your wife. You need to be 65 and it must be a RRIF to do so. She did not work and I'm trying to get as much income in her name as possible.
    2). I'm delaying OAS until 70. I'm well into claw-back territory and I want my RRIF to be very small at that time so as to minimize the penalty.
    sooo....with RRIF you transfer 50% income to spouse, but if you take income out of RRSP it's all yours - is that correct???
    what about general 'income-splitting' rules?

  9. #28
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    FWIW...wifey & I have been drawing income out of our RRSPs for couple years now. With RBC-DI. They deduct 20% withholding tax, but there's no 'withdrawal' fees. What a great bank!

  10. #29
    Senior Member heyjude's Avatar
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    Quote Originally Posted by gibor365 View Post
    Not really, you can withdraw from RRSP any amount you want, the difference between RRIF and RRSP withdrawals that in RRIF case you HAVE TO withdraw every year at least minimum (and you won't pay withholding tax), in RRSP case you can withdraw any amount in any time period you wish (and you will pay withholding tax). But the bottom line both withdrawals will generate taxable income.
    True, but if you withdraw money from your RRSP on a one time basis, you will usually pay a fee to your financial institution, like $50. If you withdraw something every year, or more frequently, those fees might be material. And a one time withdrawal from your RRSP will not qualify you to receive the pension tax credit.

  11. #30
    Senior Member zylon's Avatar
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    Quote Originally Posted by jargey3000 View Post
    Can someone clarify: Is there any difference -from a tax point of view - in withdrawing funds from an RRSP vs getting a payment from an RRIF (or a LIF, in my case)? Aren't they both taxed the same as income???
    If you want to qualify for the $2,000 pension income credit, I believe it must come from RRIF.
    RRSP withdrawal won’t give you this credit.

    I don't know about LIF.


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