TAKE A BREAK FROM YOUR RRIF IN 2025?

The Liberals’ victory in the recent federal election in April has a few important campaign measures which will now need to be formally presented via a ways and means motion to enable the proposed changes.

One of those changes is the potential to reduce mandatory RRIF Minimums for one year (2025) by 25%. The proposal was made in response to U.S. tariffs which have created economic uncertainty so far this year. Markets have largely recovered from their earlier declines in 2025, however we are only 5 months into the year. It is still believed the Liberals will still push this proposal forward.

If you are currently set to receive the prescribed minimum rate in 2025, you may want to consider your cash flow requirements for the remainder of the year in the event you could have that reduced with this proposal.

Some individuals take their RRIF payments on a monthly, quarterly or annual basis (one-time payment). If you have taken your payment(s) for 2025 already, there may be an opportunity to re-contribute these funds back without penalty (similar to what was done in 2015) when RRIF minimums had been lowered. In contrast during the pandemic year (2020) individuals who had already taken their minimums were not permitted to contribute those funds. We will await further details to determine what is actually passed and what the recontribution rules will be.

This is a great way to reduce your overall income if only for one year, but you should also consider your own individual/family income (couples) needs. As RRIF Income is Pension income which can be split it might make sense to take out the existing minimums as is. If you don’t need cash flow, you can always contribute into your TFSA if it makes sense.

This potential for a decrease in RRIF income is individualized for each specific situation and not a ‘one solution fits all’. If your tax rate is low this year and could be higher next year… it might make sense to keep things as is.

Many industry organizations continue to call on the federal government to reduce or eliminate the RIF mandatory minimum withdrawals requirements as Canadians in general are living longer, healthier lives. This is one measure which could help individuals from outliving their savings.

We will await any further advancements with this proposal. If you are interested in reducing or stopping your existing payments for 2025 now to give pause, please contact us and arrange a time to review your unique situation.

By Andrew Hawryluk
Wealth Advisor
Assante Financial Management Ltd.

The opinions expressed are those of the author and not necessarily those of Assante Financial Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.