Should I Have Converted To a RRIF?

Question: I am 56 and retired. My advisor told me to convert my $270,000 RRSP into a RRIF. Was this a good plan? If not, can I convert it back to an RRSP and should I?

Gordon Pape answer: There is no need to convert to a RRIF at this time. If you need cash from the plan, you can withdraw it from an RRSP as required and not have to worry about the minimum withdrawal requirements that are attached to a RRIF. The tax treatment will be the same in either case.

Since you are only 56, you don’t appear to qualify for the pension income credit, so there is no reason to set up a RRIF for that purpose.

We don’t like to take issue with your financial advisor, who knows your personal situation and may have had good reasons for his recommendation. But on the face of it, we can see no advantage to moving to a RRIF at this stage. We suggest you discuss the situation with him/her, and ask for a detailed explanation for the move.