To help Canadians protect their retirement savings during the recent volatile financial markets, the Government of Canada has lowered the minimum withdrawal requirements for Registered Retirement Income Funds (RRIFs) and Life Income Funds (LIFs) by up to 25% for this year.
The reduction is intended to provide flexibility to seniors who are concerned that they may be required to liquidate their RRIF assets to meet minimum withdrawal requirements. The reduction is optional and must be requested by either calling 1-800-468-3863 or by booking an appointment through Online Banking. RBC will not automatically convert this amount to be the adjusted minimum amount for 2020.
To determine what the change means for you, here are 7 key questions answered about the government’s RRIF relief measure*:
The 2020 RRIF minimum withdrawal amount is being reduced by up to 25%. That means if your minimum withdrawal amount this year would have been $10,000, the reduced amount at 25% will be $7,500. Minimum withdrawals are calculated as a percentage of the fair market value of your RRIF assets at the beginning of the year, and the percentage is based on your age at the beginning of the year.
The reduction is a temporary measure for the 2020 tax year only.
Re-contributions of any excess withdrawal from a RRIF will not be permitted under the 2020 change.
No. Reducing your minimum withdrawal by up to 25% is optional and must be requested by either calling 1-800-468-3863 or by booking an appointment through Online Banking. RBC will not automatically convert this amount to be the adjusted minimum amount for 2020.
If you have previously instructed RBC to withdraw the minimum amount on your RRIF payment instruction form, we will not automatically convert this amount to the adjusted minimum amount for 2020.
For RRIF and LIF holders who don’t require their full minimum withdrawal amount to cover annual living expenses, the temporary measure allows the extra funds to remain invested on a tax-sheltered basis. It can also help avoid the need to unnecessarily sell investments while market conditions are unfavourable.
The temporary change for 2020 applies to all types of RRIFs, including LIFs and other locked-in RRIFs. Similar rules also apply to variable benefit payments from a defined contribution Registered Pension Plan (RPP) and a pooled registered pension plan (PRPP).
No. If you choose to withdraw your original minimum amount from your RRIF or LIF, tax will not be withheld. You will only see a tax impact if you withdraw more than the unreduced amount.
If you haven’t already reached the unreduced minimum withdrawal amount for 2020 and wish to take advantage of the RRIF reduction, sign into RBC Online Banking to book an appointment or call 1-800-463-3863. We will be happy to help you with this change.