Q&A: New RRSP rules

Question: Can you please advise if an individual can convert
a RRIF to an RRSP if they are under the age of 71? I have posed the question
to two investment advisors (received one yes and one no) and
so far haven’t been unable to find the information on Revenue Canada’s website.
– S.W.

Gordon Pape answers: Finance Minister Jim Flaherty announced
in his March budget that the age for mandatory conversion of an RRSP will be
raised from 69 to 71, effective with the current tax year. In the technical
papers accompanying the budget, it specifically states as follows: “A
RRIF annuitant who is 71 years of age or younger at the end of 2007 will be
able to reconvert the RRIF to an RRSP, so long as the re-established RRSP is
converted to a RRIF before the end of the taxation year in which the individual
turns 71.”

So yes, you can do it – but why bother? The technical papers make it
clear that you can also choose to suspend any payments from the RRIF until the
year in which you turn 72, so you won’t have to make minimum withdrawals.
If you want to make more RRSP contributions, you can set up a new plan for them
– there is no rule against having a RRIF and an RRSP at the same time.
Ask your RRIF carrier to give you a break on the administration fee for the
“temporary” RRSP since you will only have it a short time and they
already have your RRIF business.