# LIF Withdrawals



## agd (Jun 14, 2014)

I recently sold all my mutual funds and transferred everything (including a LIF) to Questrade and purchased an etf portfolio. When it comes time for mandatory withdrawal from the LIF does anyone know if I have to make sure there is sufficient cash in the account for the withdrawal, or will Questrade sell sufficient etf units at the time, in proportion to my holdings, to generate the cash? Thanks.


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## Eclectic12 (Oct 20, 2010)

My understanding is that by creating the LIF, one has to start making withdrawals no later than the following year. So if the LIF was created in 2019, withdrawals have to start in 2020 at the latest. What pension authority the pension was under matters as well as some provincial authorities require a LIF to be converted to a life annuity at a certain age (usually eighty), with others like the Feds don't.

When was the LIF created and have withdrawals already been made?


I suspect Questrade would sell ETF units to have cash to withdraw but it may be quicker to ask them as I'm not sure how many are making LIF withdrawals, are with Questrade and are reading CMF.


Personally, I'd prefer to control it myself. What you prefer to sell and what a broker sells automatically may not be the same thing. As well, a LIF is treated like a RRIF so if it makes sense - one can make in-kind withdrawals of investments or a mix of cash and investments.
https://www.taxtips.ca/rrsp/inkindwithdrawals.htm


Some other info:
https://retirehappy.ca/the-differences-between-lifs-rrifs/


Sorry I can't provide a direct answer about what Questrade does.


Cheers


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## agd (Jun 14, 2014)

Thanks Eclectic12. Will ask Questrade but I find their help not always helpful (...if you know what I mean!) Good advice to self direct the generation of cash in advance of the required withdrawal. Btw it's an Ontario governed LIF - in the past the mutual fund co. sold units to generate sufficient cash.


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## Eclectic12 (Oct 20, 2010)

If the LIF has only one ETF holding like an all-in-one ETF then it may not matter. If it's got a mix of equity, bond and whatever else - automatic selling might end up cleaning out an asset type one would have preferred to hold onto for a later date.

I've got a mix so automatic selling does not sound all that great to me. 


The LIF has minimums and maximums so maybe you have to talk to them anyway to indicate what amount is desired?
Or has it been the maximum every year?


Cheers


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## agd (Jun 14, 2014)

Yes, multiple etf's, and I've told them I only want minimum w/d. On further inquiry it does appear that as you advised, it's best to decide myself on what to sell to preserve asset mix, rather than automatic selling by the broker  Thanks again.


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## AltaRed (Jun 8, 2009)

agd said:


> Yes, multiple etf's, and I've told them I only want minimum w/d. On further inquiry it does appear that as you advised, it's best to decide myself on what to sell to preserve asset mix, rather than automatic selling by the broker  Thanks again.


Not only that, but timing as well. It's always a roll of the dice, but you may wish to sell that year's withdrawal amount early in the year when markets are strong rather than get into a down draft late in the year. Not a lot different for people with stock options. 

Back in the day, I never let my option expiry date (10 years hold max) get too close before I'd exercise because one never knows the shite that can happen in the market. I'd usually exercise somewhere between beginning of year 6 and year 8, preserving at least one year's cushion. Was especially important because I'd exercise and then sell enough to pay taxes due on the exercise....so exercising at high prices was key. Sometimes I left some price growth on the table but that is the price of downside protection.

Added: I plan to do similar on my RRIF when it kicks in. I will pick Dec 1 as the withdrawal date but will sell enough sometime during the year when i think there is an opportune time in the market to sell and then hold the proceeds in a HISA in the RRIF until Dec 1 withdrawal date. I am not interested in withdrawing 'in kind'


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## agd (Jun 14, 2014)

More helpful advice - thanks AltaRed! Scheduled w/d is Dec 1, 2020 so will watch that during the next year.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> Not only that, but timing as well. It's always a roll of the dice, but you may wish to sell that year's withdrawal amount early in the year when markets are strong rather than get into a down draft late in the year. Not a lot different for people with stock options ...


A good point ... last year's roughly Oct to Dec selling rates would have been brutal for many of my stocks when compared with earlier in the year.


Cheers


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