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2020 RRIF Minimum Amount Reduction

Keeping you updated

(Updated April 7, 2020)

On March 18, 2020 the federal government announced a set of economic measures as part of the Government of Canada’s Covid-19 Economic Response Plan. That statement included proposed changes to the calculation of the 2020 required minimum withdrawal for registered retirement income funds (RRIF).

The following questions and answers are provided to help RRIF annuitants understand the changes.

For your reference the Canada Revenue Agency (CRA) has posted the following link: Economic Statement – New Measure for Annuitants of Registered Retirement Income Funds with the following Q&A below.

1. What are the changes?

The main changes are the following:

The minimum amount that must be withdrawn from RRIFs will be reduced by 25% for 2020. For example, if the 2020 minimum amount would have been $10,000, the reduced minimum amount will be $7,500.

The minimum amount for individuals receiving variable benefit payments under a defined contribution registered pension plan or pooled registered pension plan will also be reduced by 25% in 2020.  Variable benefits are payments made to plan members from a defined contribution pension plan or pooled registered pension plan in a manner similar to a RRIF.  Therefore, in this notice, all references to a RRIF apply to variable benefit payments as well.

2. What is the status of the Government’s announcement to reduce the required RRIF minimum withdrawals for 2020 by 25%?

On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. One of the measures reduces the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020. These measures were delivered as part of the Government of Canada’s COVID-19 Economic Response Plan. The proposal was included in a detailed Notice of Ways and Means Motion tabled in the House of Commons on Tuesday, March 24, 2020. The legislation containing these measures received Royal Assent on Wednesday, March 25, 2020 and is now law.

3. Will individuals who have already withdrawn more than the reduced 2020 minimum amount be permitted to re-contribute to their RRIFs an amount up to the 25% proposed reduction?

No. Individuals who have already withdrawn more than the reduced 2020 minimum amount will not be permitted to re-contribute to their RRIFs an amount up to the 25% proposed reduction.

4. Is the 25% reduction to the minimum amount applicable for 2020 and future years?

No. These changes apply only for 2020.

5. Do the changes apply to Life Income Funds and other locked-in RRIFs?

Yes. These changes apply to all types of RRIFs.

6. There is no tax withheld when the minimum amount is withdrawn from a RRIF.  If I chose to withdraw the unreduced minimum amount in 2020, will I have tax withheld?

No. Tax will only be withheld if you withdraw more than your unreduced minimum amount for 2020.

7. For non-residents, the lower treaty-reduced rates apply to periodic pension payments which include RRIF payments made in the year not exceeding the greater of 10% of the opening FMV of the plan and twice the minimum amount. How does the 2020 RRIF minimum amount reduction affect the non-resident withholding tax calculation? NEW

The lower periodic pension payment rate applies to the extent that RRIF payments made during the year do not exceed the greater of: 10% of the year-opening account value and twice the unreduced minimum amount for 2020.

8. Are we mandated by CRA to update our RRIF accounts and revise scheduled payments to reflect the reduced RRIF minimum amount? NEW

The CRA has confirmed that the reduced RRIF minimum amount is the lowest amount an annuitant needs to withdraw from the RRIF for 2020. The annuitant is not mandated to only receive this lowest amount.

9. Which RRIF minimum amount should be paid out before transfer to another institution? NEW

If the transfer occurred prior to March 18, 2020, the original minimum would have been used. For transfers after March 18, 2020, the reduced minimum should be used unless the client requests that a higher amount such as the unreduced minimum be paid out. As noted in other responses, any excess amounts paid out may not be recontributed to the RRIF.

10. For payments to the annuitant, which minimum amount should be used to calculate Box 24 excess amount on the T4RIF? NEW

The unreduced minimum amount should be used to calculate Box 24 Excess Amount.

11. RRIF minimum amounts withdrawn from a spousal RRIF are not subject to the spousal attribution rules. How does the reduction of the 2020 RRIF minimum amount affect income attribution to my spouse? NEW

The unreduced minimum amount applies for purposes of the spousal attribution rules. Only withdrawals from a spousal RRIF in excess of the unreduced minimum amount for 2020 would be subject to attribution to the contributing spouse (and only with respect to spousal RRSP contributions made during 2018 to 2020).

If you have any questions, please contact our Contact Centre at 1.800.263.9541, Monday and Tuesday between 8 am and 7 pm and Wednesday to Friday between 8 am and 6 pm. You may also contact us online here.

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