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RRIF Rules Rule

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OTTAWA — Ottawa is reducing the withdrawal rules for how much seniors must take out of registered retired income funds, a move that comes after extensive lobbying.

The existing RRIF rules, in place since 1992, require someone who turned 71 in 2014 to withdraw 7.38% of the Jan. 1, 2015 market value of their assets this year. Under the new rules that same person would have to withdraw 5.28 per cent. By age 94, they would be forced to withdraw 18.70 per cent.

“[The changes] reflect more recent long-term historical real rates of return and expected inflation,” the government said in its budget release.

Gabe Hayos, spokesperson for the chartered professional accountants, said the government was addressing concerns of some seniors that they were liquidating their RRIFs much too quickly.

“I think the bottom line is it allows seniors to manage their assets for a longer period of time so they are not paying tax early and get a return for a longer period of time,” said Hayos. “It’s a positive thing for seniors.”

The percentage that seniors will be required to withdraw at age 95 will stay capped at 20%.

“By permitting more capital preservation, the new factors will help reduce the risk of outliving one’s savings.” By age 90 the new rules will allow almost 50 per cent more capital to be preserved by age 90 compared to existing rules.

Financial Post 22Apil2015