# Timing of RIFF Withdrawals



## OneSeat (Apr 15, 2020)

Can I delay my annual RRIF withdrawals towards the end of the year (say 
November)? Instead of monthly or quarterly or annually in January?

I would normally just ask BMO Investorline but that is about impossible these days
- and even when I could I often got incomplete or misleading replies. I've been 
searching the web for half an hour for other sources but failed so far.

I can manage my overall cash flow OK - just thought it would provide a few more 
months investment funding and a simpler (once a year) funding action within the RRIF.

Anyone else do this now? Any problems?


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## AltaRed (Jun 8, 2009)

You can generally delay until Dec 15th of the year (which is what I do) for my minimum annual withdrawal. You will have to phone BMOIL to get them to change methodology and if they are anal about it, they may request a signed LOD (Letter of Direction) from you requesting a change in their system to a new schedule. Hopefully, a telephone or email request (not Secure Message) will be enough.


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## agent99 (Sep 11, 2013)

OneSeat said:


> Can I delay my annual RRIF withdrawals towards the end of the year (say
> November)? Instead of monthly or quarterly or annually in January?
> 
> Anyone else do this now? Any problems?


Yes you can do that. If you presently have a different schedule, you will of course have to contact BMOIL.

In my case, the withdrawal date defaults to a date in December - I just checked under RRIF Payments, and it says payment is yearly starting December 24th, 2020. However, you can make a non-scheduled withdrawal. I prefer to withdraw full amount early in January. I just call them with details, and that is what they do. (Some of withdrawal cash goes to TFSA, some to savings to cover tax installments and most of the rest is in form of in-kind dividend payers. I would rather earn those dividends in my taxable account than in my RRIF.)


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## OneSeat (Apr 15, 2020)

agent99 said:


> I would rather earn those dividends in my taxable account than in my RRIF.)


I assume that is to collect the dividend credit and not pay your full marginal rate when
withdrawn from your RIFF - right?

I had been thinking of increasing my withdrawals for same reason but now believe I am
better off continuing to maximize both RRIFs (tax delay) and TFSAs (no tax) - keeping 
most equities in the latter.


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## agent99 (Sep 11, 2013)

OneSeat said:


> I assume that is to collect the dividend credit and not pay your full marginal rate when
> withdrawn from your RIFF - right?


Whether you draw the minimum required in January or in December, you pay the same tax on the withdrawal. It is considered regular income regardless of what the make up of the withdrawal is. 
If you draw in December, dividends and interest accumulate and add to the RRIF balance, so you pay tax on a slightly higher amount the following year. 
Because our RRIFs are larger than our taxable accounts, they include a fair number of dividend payers. By withdrawing early in the year, I get the benefit of the dividend tax credit on the year's dividend income. So in effect pay less tax on the dividend income and have a slightly smaller RRIF balance/withdrawal the following year. 
There are other factors such as OAS clawback, but in our particular case the way we do it works for us. Not sure there is a "right" way.


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## OneSeat (Apr 15, 2020)

I understand and I agree. In my case my RRIFs and TFSAs are all similar size - not equal but similar magnitude - and of course the RRIFs are decreasing and the TFSAs increasing in size.


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## AltaRed (Jun 8, 2009)

It is situational as Agent99 says. In my case, my RRIF is more of a nuisance than of value in my portfolio, so it has always been conservatively invested and thus leaving it to December seems to be more logical. I can always advance the withdrawal to an earlier date, if for example, I am drawing from maturing GIC proceeds earlier in the year.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> In my case, my RRIF is more of a nuisance than of value in my portfolio,


Same here. Every case is different for sure.

I don't start my RRIF until next year, but I have figured out that since the RRSP and subsequently the RRIF are all in a GIC ladder, I would be better to remove the required minimum as soon as it's possible since the residual after GIC maturity is re-invested in the ladder and the cash remaining would sit fallow until year end if not removed and put to work. 

My ladder GIC's mature at various times through the year, so I will have the official withdrawal date as late as possible (i.e. Dec 15). Then, whenever the GIC matures for the year between Jan and Dec, I'll withdraw the required minimum to my non-registered account for re-investment.

ltr


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## pwm (Jan 19, 2012)

Our two RRIFs are at TDDI in TD e-Series funds. I do my selling toward the end of the year and transfer the cash to the non-registered account in January. When selling, I use the opportunity to rebalance the three funds so they stay roughly equal. (TDB900, TDB902, TDB911). The RRIF money is a trivial portion of my investments and I'm winding both RRIFs down at an aggressive pace to get rid of them ASAP. My marginal tax rate is about the same as when I worked, so not much benefit to me from the registered stuff. It can now all be done in WebBroker and does not require a phone call anymore. Thank you TD.

I do all my annual financial stuff in January just to get it done for the year so I can forget about it. I'm the type of individual who makes lists and likes to get things done early.

Withdraw from the RRIFs.
Max out the TFSAs.
Contribute to some charities.
Make my political contribution.
Open a new tax file for the new year in my filing cabinet.


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## like_to_retire (Oct 9, 2016)

pwm said:


> The RRIF money is a trivial portion of my investments and I'm winding both RRIFs down at an aggressive pace to get rid of them ASAP. My marginal tax rate is about the same as when I worked, so not much benefit to me from the registered stuff.


Can you expand on why you want to wind down the RRIF faster than the minimum rate? My situation is the same (although still a year away from RRIF) and when I calculate the effects of taking more than the minimum, it doesn't do anything but remove investments that would then lose their tax deferred status they enjoyed while in the RRSP/RRIF.

ltr


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## AltaRed (Jun 8, 2009)

I am not PWM but I would call it the nuisance factor. My RRIF is less than 10% of my portfolio and am heading into my first year of withdrawal. It is likely going to be an irritation to administer. 

As it currently stands, I see it having perhaps a 10 year life cycle, if for no other reason than by the time I am 80, I will be less interested and potentially less capable of managing it. Right now it is a 5 year bond, GIC, debenture ladder and I have very recently decided to collapse it into ONE holding of VCNS. I am quite aware I am boosting my equity asset allocation doing this but adding 40% of 10% is a 4 point jump in equity allocation that will decline over time anyway as withdrawals shrink it. 

If I follow through, it will be 100% VCNS in 5 years so the ease of administering that might cause me to keep the RRIF longer than 10 years. Time will tell but KISS is fundamental to longevity.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> I am not PWM but I would call it the nuisance factor. My RRIF is less than 10% of my portfolio and am heading into my first year of withdrawal. It is likely going to be an irritation to administer.


That's what I thought, but was wondering if PWM had some other new ideas other than the RRIF is a nuisance to administer. 

My RRSP is a very small portion of my portfolio also and is exclusively a GIC ladder, and doesn't require much other than phoning at maturity of each rung and would get simpler if TDDI would allow online renewals, but once the RRIF starts I'll have to remember at GIC maturity to keep some cash and remove the minimum withdrawal, then re-invest the remainder into that GIC rung, and admittedly that could be an confusion in older age. 

My spreadsheets show I wouldn't suffer any increase in my marginal rate if I took more than the minimum, but that 52% just hurts on any dollar I remove. I figured it's a question between keeping the RRIF funds sheltered or being taxed if they're removed, so better to just take the minimum. 

But then there is value to irritation and maybe smarter to wind it down quicker than the minimum requirements.

ltr


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## AltaRed (Jun 8, 2009)

I look at it this way. If your MTR is 52%, all you are gaining by keeping the RRIF is time value of deferring taxes. A GIC ladder is not growing much at all with what will be <2% weighted BT return in the not so distant future, of which you only get to keep 48% of that 2% return as well. 

When you think of it on an after tax basis, and what incremental return (time value) you are getting keeping it sheltered longer, it has about as much impact on your net worth and your cash flow as a gnat gnawing on an elephant's butt. Certainly won't be worth the effort of maintaining it, calculating withdrawal needs for the year, etc.


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## pwm (Jan 19, 2012)

Why do I want to wind down the RRIFs faster than the minimum rate? 

Everything AltaRed said.
It's a nuisance and only < 10% of my investments. Plus my wife is not financially savvy and I want that stuff taken care of before either of us dies. I want things to be as simple as possible going forward and deferring the taxes on that money is insignificant to me. My life expectancy is not good as I've already lived a year longer than my father did.


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## like_to_retire (Oct 9, 2016)

OK, yeah, you're definitely convincing me, especially Alta's elephant's butt part. I think you guys are right as I am in about the same situation with the small portion the RRSP represents, although it's still in the hundreds of thousands. I guess winding it down over 5-10 years makes sense for sure. I expect to be a lot more confused at 80 than I am now.

ltr


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## leoc2 (Dec 28, 2010)

Another reason to wind down RIF ASAP would be to reduce the claw-back of OAS of my surviving wife. As long as our MTR is not a factor, why not unwind as much as possible before 71. If I kick the bucket, all funds are in her name and claw back may come into play. I have outlived my father by more than 10 years.


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## agent99 (Sep 11, 2013)

AltaRed said:


> As it currently stands, I see it having perhaps a 10 year life cycle, if *for no other reason than by the time I am 80, I will be less interested and potentially less capable of managing it. *


Wow - does that mean I should give up managing our investments  

Using the MWR, our RRIFs will likely never be depleted. In fact, they may grow! We could draw more and pay more tax, but we really don't need the additional income. Or I could go to a more conservative portfolio made up mainly of GICs and Bond Funds - that should deplete the RRIF value


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## pwm (Jan 19, 2012)

leoc2 said:


> Another reason to wind down RIF ASAP would be to reduce the claw-back of OAS of my surviving wife. As long as our MTR is not a factor, why not unwind as much as possible before 71. If I kick the bucket, all funds are in her name and claw back may come into play. I have outlived my father by more than 10 years.


Good point re OAS leoc2.

I just did a quick calculation. If I died now, my wife's income would put her over the "Maximum Income Recovery Threshold" and she would loose all of her OAS. As it is now, she gets the max OAS and mine is almost entirely clawed back.


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## AltaRed (Jun 8, 2009)

agent99 said:


> Wow - does that mean I should give up managing our investments
> 
> Using the MWR, our RRIFs will likely never be depleted. In fact, they may grow! We could draw more and pay more tax, but we really don't need the additional income. Or I could go to a more conservative portfolio made up mainly of GICs and Bond Funds - that should deplete the RRIF value


If you have not looked at the RRIF withdrawal schedule, minimum withdrawals are almost 7% at age 80 and into 2 digits at age 88. Your RRIF will most certainly deplete exponentially as time progresses. Regardless, it won't be worth my time post 80 years of age to screw around with it, nor will my POA. The time will be better spent on the much larger taxable accounts. The 80-20 rule.


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## agent99 (Sep 11, 2013)

AltaRed said:


> If you have not looked at the RRIF withdrawal schedule, minimum withdrawals are almost 7% at age 80 and into 2 digits at age 88. Your RRIF will most certainly deplete exponentially as time progresses.


I have of course looked at the withdrawal schedule. And of course we know the rate increases as we get older.

Our RRIFs currently yield about 4.5% in interest and dividends. They include about 40% equity which hopefully should continue to have growth over long term. Younger spouses age can also be used. Estimated depletion between 80 and 90 is not that great.

Assuming 4.5% Total Return on RRIFs and starting at 80, the RRIF will still be worth 66% of it's initial value at age 90 and 38% by age 95. Yield may be higher or lower, but that is the gist of it.

Which may explain why I said our RRIFs likely may never be depleted.


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## AltaRed (Jun 8, 2009)

You are correct that a RRIF will technically never deplete except by wind up. Even 20% withdrawal rates from 95+ never results in a zero by itself.

I also fully understand a full blown RRIF with a growth/aggressive asset allocation could grow until about the 80 year old threshold assuming a long term 6-7% total return performance. I suspect though that will only be the case where RRIF assets form the bulk of one's investment portfolio. Those of us with the majority of investments in a taxable account would take most of our eligible dividends and capital gains there for favourable tax treatment. Some of us who have posted here have relatively inconsequential RRIFs, and we purposely allocate our fixed income in there for tax reasons. So, what one does is highly dependent on one's personal situation.


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## agent99 (Sep 11, 2013)

AltaRed said:


> You are correct that a RRIF will technically never deplete except by wind up. Even 20% withdrawal rates from 95+ never results in a zero by itself.


Not sure I made that point, although it is true.

When I said our RRIFs likely may never be depleted, I was talking about within our expected lifespan.

For those interested in how their RRIF may perform during retirement, I used this calculator to check my figures: Bear in mind that even although the numbers may look good, inflation may eat into their real value.





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RRIF Withdrawal Scheduler - Fiscal Agents - Savings and Investments - Oakville, Ontario's place for client-focused investment services since 1977


The RRIF Withdrawal Scheduler produces a year-by-year account of a Retirement Income Fund, listing the income earned and the annual payments.




www.fiscalagents.com


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## AltaRed (Jun 8, 2009)

Good calculator. Easy to play with and I was surprised at how well portfolio value held up for longer than I would have thought. For example, I plugged in 4% to reflect Vanguard's new VRIF ETF which is designed to, more or less, sustain 4% payouts long term with only maybe one year in 10 requiring some ROC due to having to have a 'net' dip into capital (reduces NAV).

One of the things I am considering is to commence a collapse of my 5 year ladder over time given the crap rates of GICs and slowly migrate to VNCS such that I would be fully VCNS in 5 years time, which makes portfolio management very easy (one holding in the RRIF). At that time, Vanguard's new VRIF will have 5 years of history and the option then would be to switch from VCNS to that. I fully recognize that would inject some equity allocation into the RRIF, but it would make for very simple RRIF management.


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## agent99 (Sep 11, 2013)

AltaRed said:


> One of the things I am considering is to commence a collapse of my 5 year ladder over time given the crap rates of GICs and slowly migrate to VNCS such that I would be fully VCNS in 5 years time, which makes portfolio management very easy (one holding in the RRIF). At that time, Vanguard's new VRIF will have 5 years of history and the option then would be to switch from VCNS to that.


Looked up VNCS(OK VCNS  ) price has held up, but very low yield - not much better than GICs?

I don't follow all these new ETFs and know a lot less about them than traditional investments. I would be very wary about putting all my eggs in one basket. 

I have dipped toe in water and own a few ETFs, but to be honest, they have not impressed me. Ones I own in small amounts are ZDV, ZRE, XRE, ZPR mostly in TFSAs (smaller accounts). Current yields may look good, but likely all losing propositions. I may start to try and learn more to get over my mental block against ETFs (and mutual funds)


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## AltaRed (Jun 8, 2009)

The ones you mention are specifically high yield ETFs and all Cdn domiciled at that. None of those have had much in the way of a capital appreciation component. The more broad based index ETFs have done better on a rolling 5 year basis. I am more inclined to own the market at a ~3% yield.

The Vanguard asset allocation ETFs, e.g. VCNS, VBAL and VGRO have done better since inception in 2018, although MAW104 continues to outperform VBAL (albeit comparative period is still too short) with the same 60/40 asset allocation. My TFSA is entirely MAW104, as is the RESP for grandchild but could just as easily be VBAL. I have no difficulty having 6 figures in an individual ETF.
VBAL
MAW104


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