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ARTICLE · 29 APRIL 2015

Budget 2015: RRIF Withdrawal Requirements Adjusted To Better Reflect Current Realities

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As widely predicted, Budget 2015 proposes to reduce the amount that annuitants are required to withdraw from a Registered Retirement Income Fund ("RRIF") in 2015 and subsequent taxation years.

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As widely predicted, Budget 2015 proposes to reduce the amount that annuitants are required to withdraw from a Registered Retirement Income Fund ("RRIF") in 2015 and subsequent taxation years.

Under the existing rules in the Income Tax Act (Canada) (the "Tax Act"), a Registered Retirement Savings Plan ("RRSP") must either be used to purchase an annuity or converted into a RRIF by the end of the year in which the RRSP holder turns 71 years of age. Once the RRSP is converted into a RRIF, contributions are no longer permitted and the RRIF holder is required to withdraw a minimum amount from the RRIF annually starting the following year. The minimum amount required to be withdrawn is calculated based on a percentage withdrawal factor that corresponds to the RRIF holder's age, multiplied by the value of the assets in the RRIF at the beginning of the year. The same percentage withdrawal factors are also used to determine the minimum amount that must be withdrawn annually

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