Partial RRIF from an RRSP account

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Kader99
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Joined: Wed Jan 13, 2021 10:44 am

Partial RRIF from an RRSP account

Post by Kader99 »

I am US resident retired and I have RRSP in Canada. Some of it is invested in CD with very small annual return and so I would like to convert it to RRIF and withdraw only 10% to minimize withholding tax. Are we allowed to convert only a portion of the RRSP to RRIF and so I will have an RRSP and RRIF accounts.

Kader
nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

Yes you can convert a portion of an RRSP to a RRIF.
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Kader99
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Joined: Wed Jan 13, 2021 10:44 am

Re: Partial RRIF from an RRSP account

Post by Kader99 »

Thanks Nelsona!
Follow up question : To ensure only the 15% withholding tax I have to withdraw 10% of the RRIF amount this year (assuming I will convert it this month) and the remaining in monthly payment next year?
Thanks in advance.
nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

If you convert this year, you technically have no ability to withdraw funds at the lower 15% rate, since the basis for determining the 10% is the beginning of year balance in your RRIF, which would be zero for 2021, since you have not yet opened it.

The payments do not have to be monthly, you can take the 10% in one shot if you wish. You could withdraw 10% on January 2nd, 2022, and have the 15% withheld.
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Kader99
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Joined: Wed Jan 13, 2021 10:44 am

Re: Partial RRIF from an RRSP account

Post by Kader99 »

Thanks again for your help!
For my understanding let's assume I convert it to RRIF this year and get my 10% on January 2nd of 2022 which will ensure the 15% withheld.
What is the rule for the remaining 90% amount if I want to withdraw it with 15% tax withheld. Do I have to wait until the following year and withdraw 10% ?
nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

yes. You can withdraw as much as you want each year, but whatever puts you over 10% will be taxed at 25%.

This is what I used to do:

I would ask for the required with drawl in, say February, based on my age. This would ensure that they are using the correct value for the calculation, and then I would later take out the remaining amount, to make up 10%.
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Powla
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Location: Pennsylvania

Re: Partial RRIF from an RRSP account-Follow up Question

Post by Powla »

Nelson,

I am curious why you took the 10% in two installments rather than a single 10% withdrawal with a 15% W/H? Was your RIF administrator unable to calculate or process the 10% based on the beginning value of the account and take the allowed 15% W/H?

I am currently working through the arduous task of switching three of our RRSPs to RIFs, at TD Waterhouse, for withdrawals of 10% starting in 2022. I started it in August and still do not have the accounts set up....Sigh!
Powla
nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

I simply wanted to be sure that their minimum withdrawl figure jived with mine. No need to do it my way.

It takes FOREVER to get accounts up and running with TD Direct (new name) from US. I missed our one year because of their delays.

I've ven had trouble now back in canada opening plain investment accounts, because of my US past.
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Kader99
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Joined: Wed Jan 13, 2021 10:44 am

Re: Partial RRIF from an RRSP account

Post by Kader99 »

Nelson,

I converted my RRSP to RRIF in Dec of last year 2021 and my bank is saying I can withdraw 4.17% (based on my age)
at 15% withholding tax. The lady at the bank doesn't seem to know as US resident I can withdraw up to 10%.
I need the 10% withdrawal at the 15% withholding tax and was wondering if you have handy a link to a regulation that stipulate that so I can convince the lady at my bank.
Thanks in advance for your help.

Kader
nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

Unfortunately, the "lady at the bank" is probably not allowed to deal with your at all. Only BROKERS who are licensed in your particular state can deal with you. Your bank (actually your self-directed brokerage associated with the bank) has specific dealers that can deal with you.

Are you sure they know that you are non-resident?

The reference is below:

https://www.canada.ca/en/revenue-agency ... oc68696107

The portion of the ITCIA is quoted here:

https://taxca.com/blog-2016-35/
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nelsona
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Re: Partial RRIF from an RRSP account

Post by nelsona »

If you can't get this resolved (you should be able to), then wait until near the end of the year, take out 10%, and then file an NR7 to get the excess refunded.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Kader99
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Joined: Wed Jan 13, 2021 10:44 am

Re: Partial RRIF from an RRSP account

Post by Kader99 »

Thanks Nelson!
Appreciate you help on this matter.
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