Turning 71

October 2018 – If you are turning 71 in 2018, you need to transfer your Registered Retirement Savings Plans (RRSP) to Registered Retirement Income Plans (RRIF) before December 31st. This includes LIRAs and LRSPs which must be transferred to a LIF. You can start income now, but are not required to do so until next year. At that point, the government has a prescribed taxable minimum withdrawal being a percentage based on your age and RRIF market value each January 1st. If you prefer the security of having guaranteed lifetime income, you can instead transfer your RRSPs/LIFs/LRSPs to life annuities or variable annuities. Unused RSP room must be contributed to your own RSP before year end. However, if you have a younger spouse, you can still make contributions to a Spousal RRSP up to their age of 71. This applies to current unused RSP room or future RSP room from future earned income. (You still get the tax deduction, but your spouse gets the money) If you have earned income this final RSP year, talk to your tax advisor about whether you should make an early 2019 RSP contribution before the transfer. It will be considered an overcontribution for one month (subject to a 1% penalty), but next year’s tax savings may more than offset this.