Tips for effectively managing your RRIF withdrawals
By Alterna Team
June 07, 2023

Registered Retirement Income Funds (RRIFs) can be a great source of retirement income for many Canadians. However, managing them effectively is important to ensure a comfortable retirement. We understand that minimizing the tax burden of RRIF withdrawals is essential for many retirees. That’s why we’ve compiled the Top 5 RRIF Tips to help reduce taxes on your RRIF withdrawals in Ontario:

Tip 1 - Plan your withdrawals carefully

You have control over the amount and timing of your RRIF withdrawals. Before deciding how much to withdraw, consider your tax bracket and other sources of income. Taking out smaller amounts each year may help reduce your overall tax burden.

Tip - 2 Use your TFSA

If you have a Tax-Free Savings Account (TFSA), consider using it to supplement your retirement income instead of making larger RRIF withdrawals. Withdrawals from a TFSA are tax-free, so using this account can help reduce your taxable income.

Tip 3 - Consider income splitting

If you have a spouse or common-law partner, consider income-splitting to reduce your overall tax burden. This involves transferring up to 50% of your pension income to your spouse or common-law partner, which can result in significant tax savings.

Tip 4 - Take advantage of tax credits

Provinces have different tax credits available to seniors. For example, the Ontario Trillium Benefit and the Ontario Senior Homeowners’ Property Tax Grant exist in Ontario. Be sure to take advantage of all credits available to reduce your overall tax burden.

Tip 5 - Consider the impact of OAS clawback

If you receive the Old Age Security (OAS) pension, your RRIF withdrawals can trigger an OAS clawback. Your OAS pension may be reduced if your income exceeds a certain threshold. Careful planning of your RRIF withdrawals can help minimize the impact of the OAS clawback.

Following these tips can help you minimize the tax burden of your RRIF withdrawals and maximize your retirement income. However, we know that every situation is unique. It’s important to consult with your Alterna Financial Advisor or tax professional to develop a personalized plan that considers all your needs while minimizing the impact of your tax liability. We are members serving members and are here to help you with your retirement needs.