Wants to defer converting RRSP

Question: I will be 69 in December 2005. I know that I am supposed to transfer my RRSPs into a RRIF, but I have read somewhere that you can defer this rollover if your spouse is younger than yourself. My wife was born in 1946 and is planning on retiring when she reaches 60. My questions: Do I have room to defer my RRSP rollover? How long can I defer for? Where can I find any reference to this from a government source? — C.F.


I’m afraid you have misunderstood the rule. You do not have the option of delaying the conversion of your RRSP into a RRIF. This must be done by Dec. 31 of the year in which you turn 69.

You may, however, use your younger spouse’s age for purposes of the minimum withdrawal requirements from your RRIF. This option, which must be chosen at the time of conversion, is useful if you do not need a great deal of income from the RRIF and wish to minimize taxes.

For example, in 2006, the first year you will have to make withdrawals from your RRIF, you will be age 69 on Jan. 1, the date on which the minimum withdrawal for the year is calculated. That means your minimum withdrawal would be 4.76 per cent of the value of thplan on Jan. 1 of that year. However, your wife will only be 59 on that date. If you base the minimum withdrawal on her age, you would only have to withdraw 3.23 per cent of the plan’s value on that date.

The withdrawal difference becomes even more dramatic when you turn 71. At that time, based on your age, the minimum withdrawal jumps to 7.38 per cent. But the minimum based on your wife’s age will be just 3.45 per cent.

There is no disadvantage to selecting this option because you can always withdraw more cash from a RRIF if you need it. However, you will not be obligated to do so.