RRIF minimum withdrawals cut by 25% for 2020

by Sound Choices, AGF Management Ltd.

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Insights and Market Perspectives

Author: Sound Choices

April 7, 2020

Here’s what you need to know.

The content in the article below is meant for Canadian investors only.

As part of the federal government’s Covid-19 Economic Response Plan, The minimum amount that must be withdrawn from Registered Retirement Income Funds (RRIFs) is reduced by 25% for 2020.

This change:

  • Came into effect on March 25, 2020
  • Applies only for 2020
  • Also applies to Life Income Funds and other locked-in RRIFs


How is the minimum withdrawal amount calculated?

To determine the amount of your minimum withdrawal for this year, you need two numbers: your age at the beginning of this year and the market value of your RRIF on December 31, 2019.

Let’s say you were 71 and had $1,000,000 in your RRIF. Looking at the table at the end of this article, the calculation is 5.28% X $1,000,000.

  • So, your minimum withdrawal amount would normally be $52,800.
  • With the 25% reduction, your new minimum withdrawal amount for 2020 would be $39,600.

Of course, you can always withdraw more than that if you need. Your financial advisor will help you determine what the appropriate amount would be for you.

Is AGF automatically reducing my 2020 minimum withdrawal amount?

No, your 2020 minimum withdrawal amount will only be reduced upon request. AGF doesn’t have enough information about your particular income needs, so only you and your financial advisor can determine if it makes sense for you to change this year’s amount.

What if I’ve already taken this year’s withdrawal? Can I put money back in?

No, if you’ve already withdrawn more than the reduced 2020 minimum amount, the federal government has said that you won’t be allowed to re-contribute the extra amount.

How will I be taxed?

Withdrawals from a RRIF are taxed as income. That doesn’t change. Also, there is no tax withheld when the minimum amount is withdrawn from a RRIF – and that’s the regular withdrawal amount, not the reduced amount.

For more information on RRIFs, contact your financial advisor and visit AGF.com/RRIF

RRIF Minimum Withdrawal Amounts

(At the beginning of the calendar year)
Required Minimum Payment
(as a % of the market value as of Dec 31 of the previous calendar year
Formula is 1/(90 – age)
71 5.28%
72 5.40%
73 5.53%
74 5.67%
75 5.82%
76 5.98%
77 6.17%
78 6.36%
79 6.58%
80 6.82%
81 7.08%
82 7.38%
83 7.71%
84 8.08%
85 8.51%
86 8.99%
87 9.55%
88 10.21%
89 10.99%
90 11.92%
91 13.06%
92 14.49%
93 16.34%
94 18.79%
95 or older 20.00%

The commentaries contained herein are provided as a general source of information and should not be considered personal investment or tax advice. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change investment decisions arising from the use or reliance on the information contained here.
The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.
AGF Management Limited (“AGF”), a Canadian reporting issuer, is an independent firm composed of wholly owned globally diverse asset management firms. AGF’s investment management subsidiaries include AGF Investments Inc. (“AGFI”), AGF Investments America Inc. (“AGFA”), Highstreet Asset Management Inc. (“Highstreet”), AGF Investments LLC (formerly FFCM LLC) (“AGFUS”), AGF International Advisors Company Limited (“AGFIA”), AGF Asset Management (Asia) Limited (“AGF AM Asia”), Doherty & Associates Ltd. (“Doherty”) and Cypress Capital Management Ltd. (“CCM”). AGFI, Highstreet, Doherty and Cypress are registered as portfolio managers across various Canadian securities commissions, in addition to other Canadian registrations. AGFA and AGFUS are U.S. registered investment advisers. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. AGF investment management subsidiaries manage a variety of mandates composed of equity, fixed income and balanced assets.
TM The ‘AGF’ logo and ® ‘Sound Choices’ are registered trademarks of AGF Management Limited and used under licence.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

© 2020 AGF Management Limited. All rights reserved.

This post was first published at the AGF Perspectives Blog.

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