Turning 71? RRSP options…

July 2019 – If you are turning 71 this year the government requires that your RRSP be closed by year end. While you can close your RRSP and take the cash, or transfer your investments to a TFSA (if you have room), either option will result in the entire value being taxable to you in 2019. Alternatively, you can transfer your RRSP to a Registered Retirement Income Fund (RRIF) tax free, at which point you will then be required to start income each year starting in 2020. The government sets a minimum amount you must take out each year based on your age (or your younger spouse’s age) and the market value of your RRIF each January 1st. You can choose to have this paid to you monthly, quarterly, semi annually or annually and you can take out more than this minimum any time. All money withdrawn will be fully taxable to you. Another option is to buy a life (or joint life) annuity with your RRSP, and receive a fixed amount of taxable income for life. While a RRIF can provide you with a variety of options, including an estate value, an annuity does not allow you to change your mind or request additional money. Guarantees are available though. Be sure to get professional advice before making your decision.