# RRIF withdrawls... rocket science -or- are the banks just dumb?



## Userkare (Nov 17, 2014)

I have a 'smallish' RRIF that I want to burn through in a few years ( to pay some of the bills ). It's in an RRIF savings account, so not locked in any way. I call the bank to ask if we can set up automatic monthly withdrawals...

me: Hello, I would like $1000 per month withdrawn from my RRIF savings, and transfer $800 to my chequing account, and remit $200 to CRA.
bank: We can't do automatic transfer, you'll have to call every month and we'll do that for you right away.
me: But why can't I just tell you now that I want $1000 per month until the money runs out?
bank: We don't know what the taxes will be, it can change; you have to call every time and we'll tell you the amount withheld.
me: I understand that the percent withholding changes based on the amount withdrawn in an entire year. I'm taking $12,000 a year, so it's 20%. That's what I'm asking you to withhold.
bank: But what if the government changes the amount, there could be tax implications for you.
me: I'm not worried about tax changes, it will be announced long before it's in effect, before the budget. If you have to withhold more or less of the $1000, then we'll just do that, and put whatever's left in my chequing.
bank: We can't do that, there will be tax implications for you.
me: Sounds like a bit of a hassle for me having to call every month, I'll rather just call once a year and take the entire $12,000.
bank: O.K. that's good too.

Seriously, a bank can't figure out how to handle such a simple request? It seems to me that their way is more problematic..... For the first couple months they will not withhold any amount because it's under the minimum required yearly withdrawal amount. Once it goes over the minimum, until it reaches $5K they will only withhold 10%. Then when it exceeds $5K they will have to adjust the remittance to 20%, and that they didn't deduct enough for the first months, and now need to make it up by withholding more than 20% for the rest of the year.

It it just me, or are they making things more complicated than they need to be?


----------



## Mookie (Feb 29, 2012)

I'm with BMO Investorline, and they allow you to choose automatic scheduled RRIF withdrawals either monthly, quarterly, semi-annually, or annually.

Maybe your bank is dumb, or maybe the agent you spoke to is dumb. Sometimes when I get a stupid sounding answer when calling customer service (whether it's a bank or otherwise) I call back later, and ask the same questions and get a totally different response from an agent that knows what they're doing.


----------



## twa2w (Mar 5, 2016)

No idea what bank this is or who you dealt with but all banks allow you to set up a scheduled RIF payment with an extra amount for taxes.
I could pissibly see them saying this if it was an RSP.
If it is a RIF, then they should be able to set up a monthly payment of 1000 per month with 200.00 per month tax withheld, providing;
12000 is greater than your annual minimum payment
2400 ( tax withheld) is greater than the tax payable on the amount over the minimum annual payment.


----------



## Userkare (Nov 17, 2014)

Exactly, as I thought; this should be something that any bank would be able to do. Previously, I had converted a small company pension administered by Great West Life into an RRIF, and that's what they did automatically... $1000/month: $800 to me, $200 to CRA until it just recently all ran out. They actually told me that since they knew beforehand that the total yearly amount was $12K, they would need to withhold 20% of each payment, and not just 10% on each $1K.

I didn't want to name the bank b/c it may just be a misunderstanding, somehow, and I don't want to give them any bad publicity... yet. At first they tried to tell me that the funds would not be available to withdraw for 1 year after I opened the RRIF. I pointed out to them that the legislation states that you must start to withdraw 1 year after opening an RRIF, but no rule about not starting before then. They backed down quickly from that stance.

So, I'll try as user Mookie suggested, and perhaps get someone different who has more RRIF knowledge; although the person I spoke to did confer with a 'manager' before giving me that lame answer about tax implications.


----------



## heyjude (May 16, 2009)

Unfortunately, bankers’ expertise is often rather spotty. I’m not surprised this happened. 

Recently I told my FA that I want to put a portion of my RRSP into a RRIF so that I can draw it down between now and age 71, thereby reducing the chances of exorbitant taxes on RMDs. He (a VP at a major bank) told me he had never seen that done and wasn’t sure it was possible. To be fair, he did not dismiss it out of hand, but consulted with his colleagues. A week later he mailed me a letter documenting our conversation and indicating that this was no problem. I was surprised he was unaware of this strategy, but at least he handled it better than your guy.


----------

