Q&A: Converting RRSPs

A 67-year-old reader wants to know when she should start moving to a RRIF. Gordon Pape responds.

Question: I will be 67 this December and was wondering when would be the best time to start to convert my RRSPs to a RRIF. I don’t want to be paying taxes all at once. – Theresa S.

Gordon Pape answers: I suggest you move just enough money into a RRIF now to take advantage of the pension income tax credit. It covers the first $2,000 of pension income and that includes RRIF payments for anyone 65 or older. If you have no other pension income (CPP and OAS don’t count), this will provide a tax break for you.

You can leave the rest of the money in the RRSPs until Dec. 31 of the year you turn 71. There is no reason to convert sooner; you’d just be putting yourself in a position of having to take forced RRIF withdrawals.

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