RRIF Withdrawal

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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Shakespeare
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RRIF Withdrawal

Post by Shakespeare » 06 Jun 2017 00:15

George wrote:
OnlyMyOpinion wrote: ↑
05Jun17 21:35
I'd be planning how you want to provide the liquidity in your RRIF's to provide for the yearly withdrawls.
A topic that I seldom see discussed. I'm greatly interested, as I turned 71 this April.

RRIF withdrawal is based on your balance at the close of the previous calendar year. If you plan to make the withdrawal at the end of the next year, i.e. the latest possible moment, you have two choices. Either (a) you can start accumulating cash, or have a GIC that matures in time, or (b) you can stay invested in equities for the entire year and plan on selling something just before the withdrawal date. (Combinations of the two are also possible of course). Under the first course, you are sacrificing part or all of a year's return on equities. Under the second course, you incur the risk that there will be a downturn in equities market just as you have to sell.

One solution is to make your withdrawal, not at the end of the year, but rather than at the beginning of the year. You then invest the proceeds in equities in a non-registered account. This eliminates both of the problems mentioned above. However, it does introduce a new risk, i.e. your financial position next April when you will finally have to pay your taxes (that part over and above the mandatory installments, which you have to pay under any scenario). It seems to me that this risk is small compared to the other possibilities.

So I'm thinking of withdrawing the minimum at the start of 2018, rather than at the end. Comments?
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Re: RRIF Withdrawal

Post by Shakespeare » 06 Jun 2017 00:17

I do my RRIF (actually LRIF) withdrawals twice a year (June/Dec). I make sure there is enough money, including cash flow or GIC maturity, to look after withdrawals sometime early in the year. After that, I don't worry about it.
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Re: RRIF Withdrawal

Post by Thegipper » 06 Jun 2017 01:29

I do mine in June and December. I just make sure I have enough cash in place. Sometimes the cash comes from maturing bonds sometimes from a stock sale. I am thinking of changing my withdrawals to March and October. With RBC I can withdraw in US dollars and that saves me some foreign exchange costs for my snow bird season.

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Re: RRIF Withdrawal

Post by Taggart » 06 Jun 2017 08:55

I'm over three years before converting to a RRIF and I'll decide what to do then. The RRIF I've been looking after for a close relative has been set at "monthly" minimum withdrawals from the brokerage into her bank account for over fifteen years now. No fees.

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Re: RRIF Withdrawal

Post by pmj » 06 Jun 2017 12:30

Copied from the "Stock Market Correction" thread:
OnlyMyOpinion wrote:
05 Jun 2017 23:35
I'd be planning how you want to provide the liquidity in your RRIF's to provide for the yearly withdrawals.
We have withdrawn from RRSPs a couple of times by just transferring equities or MFs to another account. Can assets not similarly be withdrawn from RRIFs? Cash is reqd to pay the taxes, if it's an RRSP withdrawal, but this wouldn't apply to minimum withdrawals from RRIFs.
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Re: RRIF Withdrawal

Post by OnlyMyOpinion » 06 Jun 2017 13:12

pmj wrote:
06 Jun 2017 12:30
Copied from the "Stock Market Correction" thread:
OnlyMyOpinion wrote:
05 Jun 2017 23:35
I'd be planning how you want to provide the liquidity in your RRIF's to provide for the yearly withdrawals.
We have withdrawn from RRSPs a couple of times by just transferring equities or MFs to another account. Can assets not similarly be withdrawn from RRIFs? Cash is reqd to pay the taxes, if it's an RRSP withdrawal, but this wouldn't apply to minimum withdrawals from RRIFs.
Definately. In the other thread I was just trying to point out that at age 71, while considering AA changes, make sure you have also considered how you will provide liquidity for RRIF withdrawals. In your example, via a transfer in kind of equities or MF's.

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Re: RRIF Withdrawal

Post by AltaRed » 06 Jun 2017 13:35

We are still a few years away from RRIF withdrawal but the plan would be (if it is easy enough to arrange it) to do one withdrawal a year at a time of our choosing. Do most institutions allow that sort of thing?

Rationale is to take advantage of a date of a maturing GIC/bond, or taking advantage of an equity market surge to defer an equity sale. In the overall scheme of things, it likely won't matter all that much, i.e. a decimal point advantage only, but it would nice to have flexibility. We are not interested in 'in kind' withdrawals because: 1) spouse is interested in witholding enough at time of withdrawal to match likely MTR for the tax year, and 2) I may want it almost all withheld to see if I can eliminate installment payments in future years.
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Re: RRIF Withdrawal

Post by CROCKD » 06 Jun 2017 13:57

I have both a RRIF and LIF. I make one annual withdrawal from each, the regulated minimum so there is no witholding tax. I pay my taxes by quarterly installments. These were mid year but are now in October.
Looking at my Quicken records, for the RRIF I have sold securities sometimes ahead of time holding the cash in a HISA until it being withdrawn. Once I transferred securities in kind when it was tax efficient to do so.
For the LIF I have had a maturing GIC ladder but now have a mixture of GICs and investment grade corporate bonds. So as a rung matures it provides the income to withdraw. Of course one is then faced with reinvestment of the excess cash.
I can manage my living requirements from my cash reserves so it suits me to make one annual withdrawal. Everybody has their own individual cash flow requirements and asset allocation of their pension funds so I believe everybody may well be different in this regard.
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Re: RRIF Withdrawal

Post by OnlyMyOpinion » 06 Jun 2017 14:56

I expect some of us will be able to handle our RRIF investment and withdrawal options ourselves for many years while others will at some point need to put both on autopilot or have our designated POA take over the DIY along with our other financial affairs.

My parents (85, 87) have had bank GIC RRIF's on minimum withdrawal autopilot for a number of years now. I still have to monitor and redeploy though, otherwise they default into a lousy 1 yr term rate.

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Re: RRIF Withdrawal

Post by brucecohen » 06 Jun 2017 17:40

I'm nearly five years from my first required withdrawal. I've begun migrating half my RRSP to MAW104. Without any careful consideration, I've been thinking about this:

1. A few months before the first withdrawal move the MAW104 holding to an in-house RRSP/RRIF at Mawer
2. Mawer offers an automatic withdrawal plan. Set that up based on the year's minimum RRIF rate so monthly or quarterly withdrawals average the opportunity cost/market risk

At least for now the other half will remain invested in VT and VAB. I'll take distributions in cash and each December sell units if the distributions are not enough to meet the withdrawal requirement. I suspect, though, that as the years go by and I get lazier and more addled I'll be shifting more and more into MAW104.

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Re: RRIF Withdrawal

Post by qasimodo » 06 Jun 2017 17:45

AltaRed wrote:
06 Jun 2017 13:35
We are still a few years away from RRIF withdrawal but the plan would be (if it is easy enough to arrange it) to do one withdrawal a year at a time of our choosing. Do most institutions allow that sort of thing?

Rationale is to take advantage of a date of a maturing GIC/bond, or taking advantage of an equity market surge to defer an equity sale. In the overall scheme of things, it likely won't matter all that much, i.e. a decimal point advantage only, but it would nice to have flexibility. We are not interested in 'in kind' withdrawals because: 1) spouse is interested in witholding enough at time of withdrawal to match likely MTR for the tax year, and 2) I may want it almost all withheld to see if I can eliminate installment payments in future years.

I manage RIF withdrawals for an elderly parent. I set a single mid December date (to comply with the bank's requirement for scheduled payments). During the year I withdraw the bulk of the annual withdrawal amount based on GIC maturity, accumulated interest etc and cash-flow requirements. I usually leave an insignificant amount ($10-$50) to "feed" the December scheduled payment
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Re: RRIF Withdrawal

Post by pmj » 06 Jun 2017 19:01

brucecohen wrote:
06 Jun 2017 17:40
1. A few months before the first withdrawal move the MAW104 holding to an in-house RRSP/RRIF at Mawer
2. Mawer offers an automatic withdrawal plan. Set that up based on the year's minimum RRIF rate so monthly or quarterly withdrawals average the opportunity cost/market risk
I wonder if Mawer would take an instruction to withdraw _all_ of your required withdrawal - ie _your_ number - or would they only withdraw the required percentage based on the amount held at Mawer? And if the first, would they charge either no taxes (based on your number) or would they charge taxes based on the nominal required percentage based on the amount held there?
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Re: RRIF Withdrawal

Post by gsp_ » 06 Jun 2017 19:24

pmj wrote:
06 Jun 2017 19:01
brucecohen wrote:
06 Jun 2017 17:40
1. A few months before the first withdrawal move the MAW104 holding to an in-house RRSP/RRIF at Mawer
2. Mawer offers an automatic withdrawal plan. Set that up based on the year's minimum RRIF rate so monthly or quarterly withdrawals average the opportunity cost/market risk
I wonder if Mawer would take an instruction to withdraw _all_ of your required withdrawal - ie _your_ number - or would they only withdraw the required percentage based on the amount held at Mawer? And if the first, would they charge either no taxes (based on your number) or would they charge taxes based on the nominal required percentage based on the amount held there?
They'll withdraw whatever you want but will only consider their RRIF for calculating the min, hence they'll withhold on the rest. In any case the holder of the 2nd RRIF must pay out the min, no matter what you may tell them has been withdrawn elsewhere so it wouldn't work anyway.

Also of note, If transferring a RRIF from one institution to another, the transferer HAS to pay out the min before transferring to your new institution.

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Re: RRIF Withdrawal

Post by cannew » 07 Jun 2017 19:14

We withdraw as early as possible in January. The withdrawal may include a sale of securities if we want some in cash, the balance is a transfer of shares to TFSA and the Non-registered. That way the holdings continue to generate Income which is reinvested. Should there be a correction all the better as more shares will be bought, generating even more income.
We've been lucky that we don't have to pay quarterly taxes, just file last years in Apr and pay whats due. I'd rather keep our cash till necessary, but I do have to forecast to see what the hit will be.
Last edited by cannew on 08 Jun 2017 09:27, edited 1 time in total.

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Re: RRIF Withdrawal

Post by Shakespeare » 07 Jun 2017 19:22

Stocks being put in a TFSA should probably be transferred early.
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Re: RRIF Withdrawal

Post by fundamental » 20 Jul 2017 13:36

Is there any CRA rule which forces a RIF withdrawal to come out as cash?

When cash flow isn't required, can the retiree instruct their (discount) broker to to transfer the required withdrawal "in kind" to a taxable account (while recognizing the tax burden) so as not to have to repurchase the security ?
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Re: RRIF Withdrawal

Post by AltaRed » 20 Jul 2017 13:52

fundamental wrote:
20 Jul 2017 13:36
Is there any CRA rule which forces a RIF withdrawal to come out as cash?

When cash flow isn't required, can the retiree instruct their (discount) broker to to transfer the required withdrawal "in kind" to a taxable account (while recognizing the tax burden) so as not to have to repurchase the security ?
See Cannew's post above.
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Re: RRIF Withdrawal

Post by fundamental » 20 Jul 2017 14:02

AltaRed wrote:
20 Jul 2017 13:52
fundamental wrote:
20 Jul 2017 13:36
Is there any CRA rule which forces a RIF withdrawal to come out as cash?

When cash flow isn't required, can the retiree instruct their (discount) broker to to transfer the required withdrawal "in kind" to a taxable account (while recognizing the tax burden) so as not to have to repurchase the security ?
See Cannew's post above.
Yes, thank you, saw that but couldn't find anything similar to substantiate on the CRA site?
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Re: RRIF Withdrawal

Post by kcowan » 20 Jul 2017 15:03

For the fun of it...Keith

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Re: RRIF Withdrawal

Post by fundamental » 20 Jul 2017 15:08

Thanks all ! :thumbsup:
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Re: RRIF Withdrawal

Post by AltaRed » 20 Jul 2017 15:12

fundamental wrote:
20 Jul 2017 14:02
Yes, thank you, saw that but couldn't find anything similar to substantiate on the CRA site?
I wouldn't worry about that much. TaxTips provides some assurrance if you need more.
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Re: RRIF Withdrawal

Post by CROCKD » 20 Jul 2017 15:34

I have made 'in kind' withdrawals from my RRIF to a non registered account in the past. The withdrawal security price becomes your ACB in your non registered account.
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Re: RRIF Withdrawal

Post by pmj » 20 Jul 2017 17:31

And if the process is the same as the RRSP transfer process, if you call for the transfer outside trading hours you can choose any value within the low-high range for the last trading day. This is at TDDI, maybe similar elsewhere?
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Re: RRIF Withdrawal

Post by optionable68 » 04 Nov 2017 13:06

How does TDDI determine which security to sell in order to fund a RIF withdrawal?
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Re: RRIF Withdrawal

Post by twa2w » 04 Nov 2017 13:51

You would have to ask TDDI their process but how some banks do it is as follows.

From fixed income first. Shortest maturity first, lowest rate if equal muturity dates.

If in mutual funds or etfs, from lowest risk to highest. MMF, bond, balanced, Cdn equity, US, Intnl

Equities are last and can't speak to order they would sell in. Maybe highest priced to lowest.

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