Category: RRIF

RRIF and RRSP coexistence

RobHLeave a comment

Summary: It’s possible for you to collect income from a RRIF at the same time as contributing to (and taking deductions from) an RRSP.

If you’re new to world of RRIFs, or think that they only come into play once you turn 71, then you might want to give Demystifying RRIFs a read.

In my case, I worked until the end of 2024, having opened RRIF accounts and funding them with my RRSP holdings1 in the last quarter of 20242. Unsurprisingly, my Notice of Assessment for the 2024 tax year included the usual “new” RRSP contribution room based on salary earned during the 2024 tax year.

But what to do with that RRSP room? And if I use it, when should I take the deductions?

Can I even take advantage of it?

Answer: yes, as long as i do it before I turn 71.

The CRA rules are pretty clear on this topic. You can make and deduct contributions up until the year you turn 71, even if you’re retired.

Ok, but then there’s the problem of coming up with the money to MAKE the contributions.

Making contributions to the RRSP in retirement

One of the reasons you seem to have “more” money when you retire is that you stop saving money for retirement. RRSP contributions constituted a significant line item in my annual budget while working. In retirement, I don’t really need to save the money, but taking advantage of the possibility to defer taxes seems like a good idea.

One way to tackle the issue is to initiate a small monthly contribution to my RRSP; at least this starts to build up deductions I can use when it makes sense to; I don’t need to make it a huge amount, but over time it will build up a deduction that could come in handy later.

So, when is “later”, exactly?

When to take the RRSP deduction when retired

My annual salary in retirement, by design, is variable, based on my net worth calculated every month. You can read about it here. I expect that over time my salary will increase3, so “future me” will be the one taking the deduction.

My guess is that there will be a few places where having a deduction ready might come in handy:

  • Generally, I’m just trying to reduce my overall tax bill. My advisor suggested that I try to optimize my income every year to get to an overall (not incremental) tax rate of 15% for the household. The RRSP deduction is another lever I’ll be able to use to help accomplish that.
  • I’m trying to avoid paying tax by instalments. Looks like if your tax owing is >$3000 in two consecutive years, then you’re going to be asked to pay your taxes four times a year. Taking RRIF minimum payments (as I do) means no withholding tax, so it’s rather likely that at some point I’m going to be faced with this. Having the possibility to delay this is a nice thing; I hate giving the government access to my money any sooner than strictly necessary.
  1. Most writing on this topic talks about “converting” RRSPs to RRIFs. But that’s not really how it works, at least not with two providers I have dealt with. In reality, you open new RRIF accounts and move the RRSP assets in-kind to those RRIF accounts. The RRSP account remains intact, albeit with nothing in it. ↩ī¸Ž
  2. RRIF payments become obligatory in the calendar year AFTER the year in which you open them. You can take payments sooner, but that’s a manual process, and any payment so taken will be subject to withholding tax. Since I wanted to take RRIF minimum payments in 2025, I had to have the RRIFs ready in 2024. ↩ī¸Ž
  3. The percentage of my net worth used to fund my monthly salary increases every year, just like how a RRIF calculation works. In theory, the rate of return of my retirement investments is currently higher than my percentage withdrawal, meaning that future salaries are likely to be higher than current ones, but that’s not an ironclad guarantee. ↩ī¸Ž

The Mechanics of Getting Paid in Retirement

RobH8 Comments

***This is no longer accurate; my new diagram is found at The Mechanics of Getting Paid in Retirement: 2026 Edition ***

DIY investing also means DIY decumulation. I recently completed a change in online broker from QTrade to Questrade and this is how I get paid in retirement; I’ll refer to the letters in the diagram below so you can follow along.

How I get paid, April 2025

A: QTrade? What?

I know I started by saying I completed the transfer from QTrade to Questrade, but due to an unexpected snag, I still have 4 accounts with QTrade which are currently paying a monthly obligatory RRIF-minimum contribution to my salary. I talked about the snag here, but suffice it to say I could have moved these accounts too, but at the expense of foregoing monthly payouts for the remainder of 2025, which I didn’t think was worth it.

Next year, those accounts will disappear and Questrade will handle the RRIF minimum payments.

B: Yes, there are multiple RRIF accounts

When I started the paperwork to open RRIF accounts, I was surprised that the same choices were offered as were offered for RRSPs — individual and spousal. I’m sure that some of the reason is due to the attribution rules for spousal RRIFs, but anyway, there are 4 RRIF accounts generating 4 individual payouts every month. This is automatic, so I have to make sure that there is cash available in the 4 accounts each month, or else my provider will happily charge me an arm and a leg1 to do the necessary asset sale.

The asset sale takes a few seconds; and with T+1 settlement, the cash is available the next day. Right now I try to do all my moves on the 22nd of the month, but admittedly, this is more time than strictly necessary.

C: Opening the RRIF account includes providing your banking information

I don’t know whether there is any provider out there who permits RRIF payments to be paid to a non-registered account, but so far it seems that they all prefer to make EFTs into a bank account. That’s not a problem for me but this may not be what you’re expecting. The money just shows up like a paycheque on or near the last day of the month.

D/E: The sum of all RRIF payments isn’t enough to fund my desired lifestyle

I’m withdrawing RRIF minimum payments and funding the rest of my monthly paycheque by liquidating assets held in my non-registered account. Another approach would be to increase the RRIF payments, but then that attracts withholding tax, which I hate. The monthly liquidation of assets in my non-registered account generates taxable capital gains each time, naturally. The advice I got from my retirement planner suggested I should be able to maintain an overall 15% tax rate by making sure that I have a mix of favorable taxable income (capital gains and dividends) along with the unfavorable2 RRIF income.

I keep an eye on my 2025 tax bill by using the tax calculator I mention on https://moneyengineer.ca/tools-i-use/. I can always choose to switch gears if needed.

In Questrade, movements of cash are done from their aptly-named “Move Money” menu. Setting up your bank account in Questrade was a bit clunky3 and relied on some app like Plaid to get the job done. Moving funds in this way isn’t instant, expect a delay of at least two business days in each case.

Another oddity with Questrade is that any joint non-registered account is set up as a margin account, which means it’s shockingly easy to borrow money you don’t have4.

One unknown with Questrade — I was able to move money instantly after an asset sale. It’s not clear to me whether this uses margin or not5. I’ll know more once I get my April statement, I guess. If I get charged margin interest, I’ll have to hold off moving money until the day after the asset sale.

F: Variable Percentage Withdrawal (VPW) requires the use of a cash cushion

I described the methodology I use to calculate my take-home pay in a previous post, but in essence my salary is related to my real-time net worth, filtered through a 6-month moving average so an anomalous month on the stock market doesn’t impact my take-home pay quite so quickly. VPW makes a “suggestion”, this suggestion is added to the cash cushion, divide by 6, and presto, the “suggestion” is converted to a monthly “salary”.

In any given month, the cash cushion is either being augmented by the sale of some assets in my non-registered account (the suggestion is larger than the salary), or the cash cushion is being depleted to make up the shortfall in my calculated salary (the suggestion is less than the salary). All of those movements are manual. Transferring cash between non-registered accounts is supported by Questrade, but it wasn’t supported by QTrade6.

All in all, this process should take less than 15 minutes a month. The first time included a learning curve and extra setup, but now that pre-work is done. Next step is making sure my spouse knows how to do this, too!

  1. Assuming your arm and leg are worth $40. ↩ī¸Ž
  2. Unfavorable because it’s treated as straight income, and since RRIF-minimum, no witholding tax. I’m expecting a decent tax bill come April next year. ↩ī¸Ž
  3. Bank accounts showed up in my mobile app but not on the web portal. To get them to show up there I had to set up my account — again — and successfully transfer a nominal amount. Only then would the web app remember my bank accounts. ↩ī¸Ž
  4. Which I inadvertently did, paying myself from the wrong non-registered account. Sigh. ↩ī¸Ž
  5. Since the transfer isn’t instantaneous, and since the cash really is available the day after, one could make the case that this doesn’t require margin. But I really have no idea. ↩ī¸Ž
  6. For QTrade I had to use my bank account to get around this restriction. ↩ī¸Ž

What’s in my retirement portfolio (April 2025)

RobH3 Comments

This is a (hopefully monthly) look at what’s in my retirement portfolio. The original post is here. Last month’s is here.

Portfolio Construction

The retirement portfolio is spread across a bunch of accounts:

  • 7 RRIF accounts (3 for me, 3 for my spouse, 1 at an alternative provider as a test)
  • 2 TFSA accounts
  • 3 non-registered accounts1, (1 for my spouse, 2 joint)

The target for the overall portfolio is unchanged:

  • 80% equity, spread across Canadian, US and global markets for maximum diversification
  • 15% Bond funds, from a variety of Canadian, US and global markets
  • 5% cash, held in savings-like ETFs.

The view as of this morning

As of this morning, this is what the overall portfolio looks like:

Overall retirement portfolio by holding, April 2025

The portfolio, as always, is dominated by AOA and XGRO which are 80/20 asset allocation funds in USD and CAD, respectively. The rest are primarily either cash-like holdings in two ETFs: ZMMK in CAD and ICSH in USD) or residual ETFs held in non-registered accounts for which I don’t want to create unnecessary capital gains just for the sake of holding AOA or XGRO.

The biggest month over month change was a small decline in AOA and a small uptick in XEQT, about a 1% shift overall. This was because I shifted some of my USD assets to CAD assets in the RRIF using Norbert’s Gambit2. I chose XEQT over XGRO because the contribution of bonds in the portfolio was slightly over my asset allocation target3. XEQT is essentially XGRO, minus the bond holdings (it’s a 100% equity fund).

There was also a noticeable reduction in the contribution of ICSH to the portfolio; this was largely due to the unfavourable change in the USD/CAD exchange rate over the course of the month, and not due to any change in the holdings there.

Plan for the next month

The asset-class split looks like this

Overall retirement portfolio by market, April 2025

This looks to be pretty close to my target percentages which haven’t changed:

  • 5% cash or cash-like holdings like ICSH and ZMMK
  • 15% bonds (almost all are buried in XGRO and AOA)
  • 20% Canadian equity (mostly based on ETFs that mirror the S&P/TSX 60)
  • 36% US equity (dominated by ETFs that mirror the S&P 500, with a small sprinkling of Russell 2000)
  • 24% International equity (mostly, but not exclusively, developed markets)

So, the plan for next month is, do nothing out of the ordinary. Reinvest cash (dividends, TFSA contributions) in one of AOA, XEQT/XGRO, ICSH or ZMMK depending on the asset category most in need on the day of the reinvestment. All these ETFs are covered on my ETF All-Stars page.

Overall

My retirement savings declined 5.75% over the month (down 7% since January) due to the continuing meltdown in the equity markets. It’s not a pretty picture!

Net worth of retirement savings compared to start of retirement

This has not translated to a the same degree of change in my monthly salary. Why? My retirement payouts are calculated by Variable Percentage Withdrawal (VPW), which I cover here. VPW has a built-in cash cushion, which serves to dampen month to month swings in my net worth, either up or down. As you can see in the chart below, my monthly salary has stayed within a 1% band of the first salary I drew in January.

Month over month salary, as compared to start of retirement

  1. Since Questrade combines USD and CAD assets under the same account umbrella, I was able to reduce the number here. ↩ī¸Ž
  2. I shift funds from the USD to the CAD side of the RRIF more or less quarterly since all RRIF payments are currently coming out of the CAD side of the portfolio. ↩ī¸Ž
  3. That’s the optimistic point of view; it’s perhaps more accurately stated as “bonds haven’t melted down quite as much as the equity portion of my portfolio”. ↩ī¸Ž

Cautionary Tale: changing brokers when you have a RRIF

RobH8 Comments

Summary: If you’re changing online providers with an active RRIF, the old provider is (apparently) obligated to pay out the ENTIRE RRIF amount for the current year before releasing your funds.

As you may have read previously, I’m (still) in the middle of changing online brokers from QTrade to Questrade1. Things are moving along…glacially2. I’m at step 6 of the guide.

Background

If you’re not that familiar with RRIFs, you may want to give Demystifying RRIFs a read.

At QTrade, I had 3 separate RRIF accounts:

  • One individual RRIF in CAD
  • One individual RRIF in USD
  • One spousal RRIF in CAD

QTrade makes you have different accounts for CAD and USD, whereas Questrade does not (hooray)3.

The individual and spousal RRIFs are set up to pay out RRIF minimum on a monthly basis, on the last day of the month. I expect this is a little unusual, since a lot of people seem to take their payments annually. In a weird QTrade wrinkle, one can only make payments from a CAD RRIF account, even though the USD RRIF account is used to calculate RRIF minimums4.

The RRIF transfer-out requests were initiated the instant the RRIF account was approved by Questrade, in the opening days of March (March 2 or March 3), a day or two after my February RRIF payment was processed by QTrade. Plenty of time, I figured.

Trouble Afoot?

About 2 weeks ago now, I got a cryptic email indicating that my RRIF transfer out request had been rejected by QTrade due to having “insufficient funds for RRIF payout”. Looking at my QTrade account, it looked to me like the US RRIF was moving (QTrade had already kindly charged me the $150 transfer-out fee), but the CAD RRIFs showed no signs of a transfer being initiated.

Thinking a little about it, I realized that perhaps QTrade wouldn’t release the RRIF assets to Questrade unless they could be sure Questrade could make the monthly RRIF minimum payment, which strikes me as silly, but I expect there’s some regulation that makes this mandatory. And so I immediately sold a few shares of XGRO in each of the RRIF accounts to ensure enough cash existed to cover the RRIF minimum payments and re-initiated the transfer out request.

But again, rejection. What?

But that, apparently, was not fully correct.

Current State of Play, and Some Advice

Today, I was informed by QTrade that no, they are obligated to pay out the ENTIRE RRIF payment for the year before they hand off the account to Questrade. Given the state of the market, I’m not exactly jumping up and down at the thought of having to sell 9 months worth of RRIF payments all at once. (This was, after all, EXACTLY why I set up the RRIFs to pay out monthly.)

So, I’ve decided to leave the QTrade RRIFs alone for the time being. This is far from ideal (multiple providers breaks all my rules about retirement investments being simple), but I take solace in the fact that

  • I will fix this at the end of the year, once most of my RRIF has been paid out
  • Maybe there will be another promotion before then 🙂

All this to say that make sure you have sufficient funds to cover any anticipated RRIF payouts BEFORE initiating a transfer-out request!

  1. And in what may be a minor miracle, I had BOTH providers call ME ON THE SAME DAY without prompting. ↩ī¸Ž
  2. Most of the account transfer requests are 20+ days old at this point. I did struggle with completing the RESP transfer form correctly. The TFSAs moved quickly. The individual investment account moved quickly. The joint investment accounts are taking a lot longer. And the RRIFs longer still. The RESP, no idea. ↩ī¸Ž
  3. Having filled out 14 different account transfer requests, ANYTHING that will reduce my account count is welcome. ↩ī¸Ž
  4. This weird treatment was one of the reasons I started looking at other providers. QTrade claimed they could allow USD RRIF payments, but rejected my initial efforts to make that happen. The day before I started moving everything to Questrade, and two months after I complained about it, QTrade support contacted me to tell me that, oops, sorry, you can withdraw USD from your RRIF. Too late! ↩ī¸Ž