Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
You’ve spent many years carefully putting money aside in your Registered Retirement Savings Plans (RRSPs). Now it’s time to start withdrawing those funds. Here’s what you need to know.
RRSPs must be converted into a Registered Retirement Income Fund (RRIF) by the end of the calendar year the accountholder turns 71. If you contribute to a spousal RRSP, it must be converted to a spousal RRIF by the end of the calendar year the spouse-accountholder turns 71.
You/your spouse must begin withdrawing from the RRIF in the next calendar following the conversion from RRSP to RRIF. If you convert your RRSP to a RRIF in 201,9 you must begin withdrawing funds in 2020.
RRIF Withdrawal
RRIF payments are intended to continue for the balance of your life. You are required to withdraw a prescribed percentage of the market value of your RRIF at the beginning of each calendar year, based on your age. You can also base the withdrawal on your spouse’s age, however once you choose that option, you cannot switch later.
RRIF payments must be included as income and will be taxed at your normal marginal tax rate, based on your income and province of residence. Your financial institution will issue you a T4-RIF showing your withdrawal amount and any taxes deducted.
RRIF payments from a spousal RRIF are declared on the spouse's T1 General Income Tax Return-that's the form you fill out to file your income taxes every year. The Attribution rule applies to Spousal RRIFs. If amounts in excess of the minimum amount are withdrawn, the contributor will have to pay the taxes on it if s/he made contributions to the spousal RRSP within 3 years of it being converted to a Spousal RRIF. You can learn more here. If only the minimum amount is withdrawn, the annuitant declares it.
What is Marginal Tax Rate
Your marginal tax rate is the combined federal and provincial taxes you pay on all sources of income at tax time. Your financial institution will provide a T4-RIF showing the amount of the withdrawal, and any tax withheld, if applicable. You must declare this amount on your T1 General Income Tax Return in the calendar year you withdrew it.
Remember: RRIF withdrawal amounts are added to your gross earned income. Depending on the size of the withdrawal, it could push you into a higher tax bracket.
Federal Tax Rates 2019
The following are the federal tax rate for 2019 according to the Canada Revenue Agency:
15% on the first $47,630 of taxable income, and
20.5% on the next $47,629 of taxable income (on the portion of taxable income over $47,630 up to $95,259) and
26% on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667) and
29% on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371) and
33% of taxable income over $210,371.
Provincial Tax Rates 2019 (in addition to federal tax)
The following are the provincial tax rates for 2019 (in addition to federal tax) according to the Canada Revenue Agency:
| Province | Tax Rate |
|---|---|
| British Columbia | 5.06% on the first $39,676 of taxable income, + |
| 7.7% on the next $39,677, + | |
| 10.5% on the next $11,754, + | |
| 12.29% on the next $19,523, + | |
| 14.7% on the next $39,370, + | |
| 16.8% on the amount over $150,000 | |
| Alberta | 10% on the first $128,145 of taxable income, + |
| 12% on the next $25,628, + | |
| 13% on the next $51,258, + | |
| 14% on the next $102,516, + | |
| 15% on the amount over $307,547 | |
| Saskatchewan | 10.5% on the first $45,225 of taxable income, + |
| 12.5% on the next $83,989, + | |
| 14.5% on the amount over $129,214 | |
| Manitoba | 10.8% on the first $31,843 of taxable income, + |
| 12.75% on the next $36,978, + | |
| 17.4% on the amount over $68,821 | |
| Ontario | 5.05% on the first $42,960 of taxable income, + |
| 9.15% on the next $42,963, + | |
| 11.16% on the next $64,077, + | |
| 12.16% on the next $70,000, + | |
| 13.16 % on the amount over $220,000 | |
| Quebec | 15% $43,055 or less |
| 20% More than $43,055, but not more than $86,105 | |
| 24% More than $86,105, but not more than $104,765 | |
| 25.75% More than $104,765 | |
| New Brunswick | 9.68% on the first $41,675 of taxable income, + |
| 14.82% on the next $41,676, + | |
| 16.52% on the next $52,159, + | |
| 17.84% on the next $18,872, + | |
| 20.3% on the amount over $154,382 | |
| Nova Scotia | 8.79% on the first $29,590 of taxable income, + |
| 14.95% on the next $29,590, + | |
| 16.67% on the next $33,820, + | |
| 17.5% on the next $57,000, + | |
| 21% on the amount over $150,000 | |
| Prince Edward Island | 9.8% on the first $31,984 of taxable income, + |
| 13.8% on the next $31,985, + | |
| 16.7% on the amount over $63,969 | |
| Newfoundland and Labrador | 8.7% on the first $36,926 of taxable income, + |
| 14.5% on the next $36,926, + | |
| 15.8% on the next $57,998, + | |
| 17.3% on the next $52,740, + | |
| 18.3% on the amount over $184,590 | |
| Nunavut | 4% on the first $44,437 of taxable income, + |
| 7% on the next $44,437, + | |
| 9% on the next $55,614, + | |
| 11.5% on the amount over $144,488 | |
| Yukon | 6.4% on the first $46,605 of taxable income, + |
| 9% on the next $46,603, + | |
| 10.9% on the next $51,281, + | |
| 12.8% on the next $355,511, + | |
| 15% on the amount over $500,000 | |
| Northwest Territories | 5.9% on the first $42,209 of taxable income, + |
| 8.6% on the next $42,211, + | |
| 12.2% on the next $52,828, + | |
| 14.05% on the amount over $137,248 |
Remember: Your marginal tax rate is the total of both federal and provincial income taxes on income. A resident of Nunavut earning $42,000 (before deductions and tax credits) would pay 19% (4% provincial and 15% federal). A resident of Ontario earning $42,000 (before deductions and tax credits) would pay 20.05% (5.05% provincial and 15% federal).
RRIF Withdrawal Rates
| Age of RRIF/Spousal RRIF Annuitant or Spouse | Pre-March 1986 | Qualifying RRIFs | All Other RRIFs |
|---|---|---|---|
| 71 | 0.0526 | 0.0526 | 0.0526 |
| 72 | 0.0556 | 0.054 | 0.054 |
| 73 | 0.0588 | 0.0553 | 0.0553 |
| 74 | 0.0625 | 0.0567 | 0.0567 |
| 75 | 0.0667 | 0.0582 | 0.0582 |
| 76 | 0.0714 | 0.0598 | 0.0598 |
| 77 | 0.0769 | 0.0617 | 0.0617 |
| 78 | 0.0833 | 0.0636 | 0.0636 |
| 79 | 0.0909 | 0.0658 | 0.0658 |
| 80 | 0.1 | 0.0682 | 0.0682 |
| 81 | 0.1111 | 0.0708 | 0.0708 |
| 82 | 0.0125 | 0.0738 | 0.0738 |
| 83 | 0.1429 | 0.0771 | 0.0771 |
| 84 | 0.1667 | 0.0808 | 0.0808 |
| 85 | 0.2 | 0.0851 | 0.0851 |
| 86 | 0.25 | 0.0899 | 0.0899 |
| 87 | 0.3333 | 0.0955 | 0.0955 |
| 88 | 0.5 | 0.1021 | 0.1021 |
| 89 | 1 | 0.1099 | 0.1099 |
| 90 | 0 | 0.1192 | 0.1192 |
| 91 | 0 | 0.1306 | 0.1306 |
| 92 | 0 | 0.1449 | 0.1449 |
| 93 | 0 | 0.1634 | 0.1634 |
| 94 | 0 | 0.1879 | 0.1879 |
| 95+ | 0 | 0.2 | 0.2 |
You must withdrawal a minimum amount from your RRIF each year. You can take that withdrawal in monthly payments, quarterly payments, semi-annual payments or in a lump sum, as long as the total amount equals the minimum amount.
Use “All Other RRIFs” unless:
Pre-March 1986 applies to RRIFs that were set up before 1986 and were never amended.
A qualifying RRIF has never received any property as consideration other than transfers from another qualifying RRIF and was set up:
Before 1986 and never revised or amended.
After 1986 and before 1993 or
after 1992 with funds or property transferred directly from another qualifying RRIF.
If you withdraw only the minimum amount required, there will be no withholding tax. If you withdraw more than the minimum amount, your financial institution will withhold tax and remit it to Canada Revenue Agency on your behalf. Any withholding tax will be declared on Box 28 of your T4RIF.
RRIF Minimum Withdrawal
For 2018, the prescribed RRIF minimum amount is calculated by multiplying the market value of your RRIF at the beginning of the calendar year by the prescribed factor based on your age. If you chose to use your spouse’s age, choose that factor instead.
If the annuitant is younger than age 70, the prescribed factor is 1 divided by (90 minus age of annuitant.)
What is withholding tax?
Withholding tax is a tax that is withheld when you make a withdrawal from your RRIF in excess of the minimum withdrawal required. The tax withheld by your financial institution is passed to the CRA. The rate of RRIF withholding tax varies depending on the amount in excess of the RRIF minimum you withdraw and the province you live in. Your financial institution will apply the withholding tax on the full amount of the withdrawal that is in excess of the RRIF minimum, even if you take it in monthly installments. For example, if you withdraw an additional $6000, you will pay a 20% withholding tax, even if you spread the amount over 12 months. Those taxes withheld at source help reduce your taxes owing later.
For British Columbia, Alberta, Saskatchewan, Ontario, New Brunswick, Nova Scotia, Nunavut, Newfoundland and Labrador, Prince Edward Island, Yukon and Northwest Territories the following tax rates apply:
| Amount of withdrawal | Tax Rate |
|---|---|
| $0-$5,000 | 10% |
| $5,001-$15,000 | 20% |
| $15,000 + | 30% |
For Quebec*, the following RRSP withholding tax rates apply:
| Amount of Withdrawal | Tax Rate |
|---|---|
| $0-$5,000 | 5% |
| $5,001-$15,000 | 10% |
| $15,000+ | 15% |
Residents of Québec also pay provincial sales tax of 16% in addition to the federal withholding tax. If you are a non-resident of Canada, you will pay 25% tax withholding regardless of the size of the withdrawal. The withholding tax is generally not enough to cover all taxes owing on the withdrawal, depending on your other sources of income.
RRIF Withdrawal Rules
You must withdraw your first payment by the end of the calendar year after you set up the RRIF. If you set up the RRIF in 2018, you must begin withdrawing income in 2019.
You must withdraw the minimum RRIF amount. It is calculated by multiplying the market value of your RRIF as as January 1 of the calendar year by the prescribed RRIF amount based on either your age or your spouse's age. (see RRIF Withdrawal Rates above.) You may request a lump sum, semi-annual, quarterly or monthly withdrawals, but they total must be the RRIF minimum amount.
You do not need to specify the amount you need to withdraw; your financial institution will calculate it for you. You can set up automatic withdrawals at the convenient times for you-yearly, semi-annually, quarterly or monthly.
You can withdraw from more than one RRIF account, as long as the total adds up to the RRIF minimum.
You can base the withdrawal amount on your spouse's age, but you cannot change the designation after the payments begin.
If you withdraw only the minimum amount, no tax will be withheld on the withdrawal amount. If you withdraw more than the minimum amount, there will be tax withheld.
Any amount withdrawn from your RRIF must be declared as income on your T1 General Income Tax Return. Your financial institution will provide you with a T4-RIF. Any withdrawals from a Spousal RRIF are declared on the spouse's income tax.
The Attribution rule applies to Spousal RRIFs. As long as only the minimum amount is withdrawn from the RRIF, the spouse-annuitant must declare the income and pay tax on it. However, if amounts in excess of the minimum amount are withdrawn, the contributor will have to pay the taxes on it if s/he made contributions to the spousal RRSP within 3 years of it being converted to a Spousal RRIF. You can learn more here.
Last Updated November 15, 2019
Grow your retirement savings
Start saving