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RRIF withdrawal limits for 2021

As a pandemic measure, Ottawa reduced the minimum withdrawals from registered retirement income funds (RRIFs) in 2020.

In March, 2020 as part of its pandemic response the federal government reduced the minimum withdrawal rate for registered retirement income funds (RRIFs) by 25%.

The measure was temporary and only applies to the 2020 tax year. In 2021, the usual withdrawal requirements apply.

For example, if you were 71 on Jan. 1, 2020, you would have needed to withdraw 3.96 per cent of the opening balance for the year, rather than 5.28 per cent set out in withdrawal tables.

The lower minimum withdrawal also applies to Life Income Funds (LIFs) and other locked-in RRIFs. If the amount withdrawn was more than the temporarily-lowered minimum amount in 2020, unfortunately, you can’t recontribute any excess back to your RRIF.

The minimum annual withdrawal limits for RRIFs were eased in the 2015 federal budget. It was a recognition that we’re living longer and rates of return on investments are much lower than they were.

RRIFs are the flip side of Registered Retirement Savings Plans (RRSPs). RRSPs encourage you to save by offering a tax break when you make a contribution. RRIFs allows Ottawa to get the tax back by forcing you to withdraw the money.

You must convert your RRSP into an RRIF by the end of the year in which you turn 71.

Here are some articles that explain RRIFs and RRSPs:

What you need to know about RRIFs

RRSP vs TFSA: 2 effective ways to save

Adam Mayers writes about investing and personal finance. He is a contributor to the Globe & Mail’s Globe Advisor and a contributing editor to Gordon Pape's Internet Wealth Builder newsletter. Adam was Business Editor and investment columnist at The Toronto Star and is the author of six books.

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