You can base the RRIF Withdrawal on a Lower Aged Spouse to Reduce the Minimum Withdrawal Amount

If you find that you are in the enviable position of not NEEDING to make withdrawals from your RRIF account in order to cover your regular living expenses, there is a way to reduce the minimum required withdrawal each year. You can elect to have the withdrawal minimums based on the age of a lower aged spouse or common-law partner.

If you recall from the previous post on RRIF withdrawal minimums, the younger you are, the less you have to take out.

Let’s say you are 71 and converting your RRSP to a RRIF account. You don’t have to make any withdrawals in the year you make the conversion, but starting the following year, when you are 72, you will. If you have a RRIF of $500,000 you will need to make a withdrawal of $37,400 – all of which is taxable as income.

BUT, if you happen to have a spouse who is 50, and you elected to base the withdrawal amount on THEIR age you would find that using the age formula (for ages under 71): 1 / (90-50) = 2.5%. This means you would only need to withdraw $12,500. Not only that – you have a spouse who is over 20 years younger than you – life is good!

Preet Banerjee
Preet Banerjee an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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