Page 81 - A Canuck's Guide to Financial Literacy 2020

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When you file your tax return, the withdrawal income may be subject to a lower or higher tax
rate which could result in a refund to you or a balance owing. The tax rate would depend on
your sources of income, tax deductions and tax credits for that tax year.

Blended Payments Withdrawals

Blended payments are part minimum and part excess amount. The excess portion of each
instalment payment would be subject withholding tax. The excess amount would be subject
to withholding tax. The withholding tax is determined as if you were to withdraw the excess
amount at one-lump sum payment instead of a series of payments.

For example, your yearly minimum RRIF withdrawal for the year is $5,000. You decide to
withdraw $12,000 from the account monthly at $1,000 a month using a pre-authorized
withdrawal program.

The additional amount that you are planning to withdraw over the minimum is $7,000.
($12,000-$5,000). According to the table above, the portion of each monthly payment that is
in excess of the minimum is subject to 20% withholding tax and not 10% which would apply
to a $1,000 withdrawal.

T4-RIF Tax Slip

The tax slip is issued by end of February by your financial institution. The T4-RIF will report
the income that has been paid out to you in addition to any federal and provincial taxes that
have been withheld.

Taxation of Quebec Residents

For residents of Quebec, T4-RIF will not show your provincial taxes withheld as in addition
to a T4-RIF, residents in Quebec will also receive a Releve 2 slip for provincial income
purposes. Releve 2, Revenus De Retraite Et Rentes, will state the gross income plus any
Quebec withholding tax.

What happens to a RRIF when you die?

At death, the value of the Registered Retirement Income Fund is included in the income of
the deceased as they’re deemed to have received the value of the RRIF, immediately
before death. However, keep in mind that income tax may be deferred if the named
beneficiary on the RRIF is:

1. Spouse
2. Dependent Child Under 18