RRIF and LIF Withdrawal Schedule
You can fully control the RRIF and LIF withdrawal schedule in your scenarios.
In this article:
Default Settings for RRIF and LIF accounts
- The default RRSP to RRIF conversion age is 71 so the income starts at age 72.
- The default LIRA to LIF conversion age is the year prior to the retirement age so the income starts at retirement.
- A DCPP (Defined Contribution Pension Plan) account will convert to a LIF at the LIRA to LIF conversion age.
- If you have multiple RRSP accounts for a client, they will all be converted to RRIF accounts at the same time. Similarly for multiple LIF and DCPP accounts.
- Minimum RRIF and LIF withdrawals are enforced by the software in the year following the conversion. The withdrawals are based on the age of the account owner, but the withdrawals can be based on the age of the younger spouse under the Scenario Settings.
- By default, minimums are withdrawn from RRIF and LIF accounts unless there isn't enough cash flow from other assets, then Snap will try to withdraw more.
- LIF maximum withdrawals are enforced for all provinces except Saskatchewan.
- The LIF jurisdiction can be selected under Scenario Setup -> Settings -> Registered Assets. If this setting is not selected, the default jurisdiction for a LIRA/LIF is the client's province of residence.
Changing the Default Settings
Conversion age updates:
To change the default RRIF and LIF conversion age in Snap, you can select Scenario Setup -> Settings -> Registered Assets.
Update the text fields indicated here.
Changing the LIRA/DCPP/LIF jurisdiction from the default province of residence and unlocking a portion of the account at conversion:
To select the jurisdiction of the account, please choose from the list as shown below. In some provinces, it is possible to unlock a portion of the LIRA upon conversion to a LIF account. You can assign a percentage to unlock at the conversion age and the account to transfer the unlocked portion to in the table.
Basing the minimum RRIF and/or LIF withdrawals on the age of the younger spouse:When the RRIF or LIF is first established, the holder has an option to base the minimum withdrawals on the age of their younger spouse or common-law partner.To enable this feature in Snap, from the Planning page for the client or spouse, select Scenario Setup -> Settings -> Advanced and enable Base minimum RRIF withdrawals on the age of the younger spouse and/or Base minimum LIF withdrawals on the age of the younger spouse.
Overriding the automatic withdrawals from RRIF or LIF accounts
By default, minimums are withdrawn from RRIF and LIF accounts unless there isn't enough cash flow from other assets, then Snap will try to withdraw more. To ensure minimum RRIF/LIF withdrawals only, you can enter a $0 under the Contribution column for that asset. When you run the scenario, the software will update the $0 to the minimum withdrawal required.
Snap will allow you to withdraw more from RRIF accounts if you wish but will stop you from withdrawing less than you are allowed to (i.e. you tried to withdraw less than the minimum). In this case, your entry of the RRIF withdrawal will be automatically updated to the minimum withdrawal required when you run the scenario. The yellow background on the values indicates that you have manually entered a specific withdrawal override.
In the example below, the RRIF schedule has started at age 72, and minimum withdrawals are being made, but we made a $50,000 withdrawal 3 years later.
Similar logic applies to LIF, with the exception that LIF enforces minimums and maximums on withdrawals. If you enter a value that is greater than the LIF maximum, Snap will adjust this withdrawal to the maximum allowed in that year when you run the scenario. To enforce maximum LIF withdrawals, enter a much larger negative value than what is automatically displayed. As an example, if the automatic LIF withdrawal is $28,048, enter -$60,000 as the value under the Contribution column. (Make sure to include the negative sign or the software will enforce the minimum withdrawals rather than the maximum withdrawals.)