Q&A: RRIF withdrawal dilemma

Question: I hold shares of a mortgage investment corporation (MIC) in my self-directed RRIF with a large discount broker. My annual RRIF withdrawal is scheduled within a few weeks. The broker has not contacted the MIC to obtain the market value of my shares on Dec. 31, 2009. They have calculated my minimum RRIF withdrawal on the assumption that the MIC shares have zero market value, whereas the MIC management states that the market value is the same as the book value and that their auditors can confirm this. When I contacted the discount broker, I was told that it is too late to correct the MIC value and update the minimum annual withdrawal for this year. As a result, the withholding tax will be less than it should be.

I am concerned that CRA will hold me responsible for the incorrect minimum withdrawal and tax payment, exposing me to potential interest and penalties. What should I do? – Alistair T.

Gordon Pape answers: You are not obliged to take only the minimum payment from the RRIF. You can withdraw any amount you wish. So do your own calculation of what the MIC shares are worth and what that amount would represent in terms of the minimum requirement. Then instruct the broker to add that to your Jan. 30 payment or to issue a separate payment later.

For example, suppose the MIC shares are worth $10,000 and you are 72 years old. The minimum RRIF withdrawal at that age is 7.48%. So take an additional $748 from the RRIF, have the tax withheld as usual, and you should have no problems

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