RRIF conversion timing

crossbordernut · Post by **crossbordernut** » Fri Jul 28, 2017 11:46 am

Eddy Eager and Larry Lazy are both RRSP holders of the same age (under 71) who move to the US in fall 2017. Eddy converts his RRSP to a RRIF before year-end 2017, while Larry converts his in early 2018. Since the ITCIA periodic payment definition relies on a start of year RRIF value, does Eddy technically benefit from an extra year of ability to withdraw at 15% since Larry's RRIF only has a Jan 1 start value in 2019?

nelsona · Post by **nelsona** » Fri Jul 28, 2017 12:10 pm

Yes. Larry would lose out for his indolence.

Note that RRIF conversion can be a lengthy process, and firms give priority to clients who MUST convert due to age, over electives. Firms typically start the process for these clients automatically in Fall.
Given Eddy's impending move, which introduces the added complication of converting the RRSP to an account for US residents (even internally this typically requires a change), he would be best advised to begin the process sooner rather than later.

In my experience, converting an existing US-client RRSP to a RRIF is a paperwork nightmare, and I missed the year-end deadline even though I started the process in October!

nelsona · Post by **nelsona** » Fri Jul 28, 2017 12:14 pm

While one could try to equate the start of the RRIF as the start of the year, I know of no firms that adopt that interpretation . The B-O-Y rule also jives with minimum withdrawal rules for Cdn residents, so hard to argue otherwise.

crossbordernut · Post by **crossbordernut** » Fri Jul 28, 2017 3:29 pm

Thank you!