i. Convert RRSPs to RRIFs in the year you turn 65
Funds in RRSPs are required to be withdrawn (subject to
tax) or converted
to a RRIF (tax-free) by the end of the year in which the taxpayer turns 71. However, because withdrawals from a RRIF are
eligible for the pension income tax credit, it may be useful to
convert at least a portion of RRSPs to a RRIF in the year in
which the taxpayer turns 65. The amount converted
should be sufficient to allow withdrawals of at least $2,000
per year for 7 years (age 65 to 71 inclusive), until all
RRSPs must be converted to RRIFs. If there is a
spouse, twice as much could be converted to take advantage
of the pension
splitting available. The spouse might also be able to take advantage
of the pension tax credit, depending on
his/her age.
Keep in mind that
administration fees may be charged on a RRIF with a low
balance.
See our RRIF calculator
for calculating minimum withdrawals, fixed annual withdrawals adjusted for
inflation, or withdrawals using a fixed number of years.
