Timing the withdrawal of RRSP savings to minimize your tax hit

Q. I’ve been fully retired since 2018, and living only on government pension (QPP, OAS and GIS). I have some RRSP and TFSA investments, and would like some help with determining when I should start withdrawing funds—and whether I will need to pay tax. I’ll be turning 71 in December 2021. 

From whom do I seek out advice on this—my financial advisor, where I have my investments, or an accountant? And when would be the best time to seek it?

A. I hear your concern, Ellen. You’ve done the right thing, wanting to be independent in retirement by making investments inside your RRSP, but now you’re facing taxable withdrawals and a reduction in your Guaranteed Income Supplement (GIS) benefit. 

You’re asking who you should seek advice from and, in this case, going to your financial planner first may be best. They will assess your situation and refer you to an accountant if needed. 

Even before you go to your financial planner, though, I want to help you brush up on your knowledge of RRIF withdrawals and the GIS.     

Any time during the year you turn 71, you have to convert your RRSP to a RRIF, and it is not until the year you turn 72 that you have to draw money from your RRIF.  

Money drawn from your RRIF is considered taxable income and may reduce your GIS. This is unlike money drawn from your TFSA, which is not considered taxable income and does not reduce your GIS.

Here are two tools that will really help you understand the implications of RRIF withdrawals on your GIS: 

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