The ripple effect of RRIF withdrawals

A reader whose first RRIF withdrawal pushed his tax bill higher than expected, and triggered CRA instalment payments, asks Allan about the ripple effects of mandatory RRIF withdrawals after age 71. Allan walks through why the withdrawal is taxed as ordinary income stacked on top of other income, how instalment payments work and how to avoid being caught off guard by them, and covers pension splitting, spousal RRSP contributions, and basing minimum withdrawals on a younger partner as ways couples can soften the impact. He also makes the case for not overreacting: RRSPs and RRIFs remain excellent vehicles despite the tax that eventually comes due.