i. Convert RRSPs to RRIFs at
age 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Funds in RRSPs are required to be withdrawn (subject to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 starting in 2007.
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.