In a discussion about RRIF minimum withdrawals, the following question came up: what is the exact value used for portfolio size? RRIF owners must withdraw a percentage each year, but a percentage of what value? The value of a portfolio can vary minute-by-minute. I found the answer surprisingly hard to find.
Curiously, the CRA guide for RRSPs, RRIFs, and RPPs was not helpful. This guide didn’t even contain the table of RRIF percentage withdrawals by age. I actually found the answer in a CRA guide intended for RRSP and RRIF plan administrators. Appendix D contains the table of percentages of minimum RRIF withdrawals at each age along with the following text:
“As the carrier of a RRIF, you have to pay a minimum amount to the annuitant every year after the year in which the RRIF is set up. You calculate this amount by multiplying the FMV of the property held in the RRIF at the start of the year by a prescribed factor.”
So, it’s the value of the RRIF contents at the start of the year that matters. Generally, I prefer to get answers to questions like this from the horse’s mouth (CRA in this case). Other sources might give clearer explanations and better insight, but it’s a good idea to confirm information with actual CRA documents.
Many posts on this subject reproduce the table of RRIF withdrawal percentages for each age, but I’ll avoid this just in case it changes with today’s federal budget.