RRIF income split
First, you can distribute up to 50% of your eligible pension income with your spouse or common law partner. This can reduce the consolidation of taxes payable by transferring income from the tax return to the spouse’s income. RRSP withdrawals do not count, but RRIF withdrawals are eligible to separate once you are 65 years old.
Eligible pension income is also eligible for the federal pension income tax credit, which reduces eligible income of $2,000 on tax payable. Provincial pension income amounts range from $1,000 to $2,000. Therefore, a small amount of RRIF withdrawals can be tax-free or close to taxation.
Partial conversion of RRSP
If you convert a portion of RRSP to RRIF, Jackie, only the converted portion will be subject to the minimum annual withdrawal. The balance of your RRSP account is not.
If you have multiple RRIF accounts, the minimum withdrawal is calculated independently for each account.
Again, the minimum withdrawal is only available for one year after opening RRIF. There was no minimum evacuation in the first year.
Confirm minimum withdrawal
Your financial institution is responsible for confirming your minimum evacuation and ensuring that you accept it every year. They should notify you of the year-end value and minimum withdrawals based on your age at the beginning of the calendar year.
Financial institutions will often give you the option to withdraw frequency (such as annual, quarterly, monthly or otherwise) and whether to withhold optional income taxes.
As mentioned earlier, for minimum evacuation, no withholding tax is required. If you make an additional withdrawal, the amounts exceeding the minimum limit will gradually reduce the withholding rate. However, because income is taxable, some RRIF account holders choose to pay optional taxes in anticipation of taxation.
