RRSP Maturity- When You Turn 71
You can contribute to your RRSP account until December 31 of the year in which you turn 71. The maximum that you can contribute should be indicated on your most recent Notice of Assessment before turning 71.
TIP:
You do not have to deduct all the RRSP contribution in that year. You can carry forward unused amounts and deduct them in any future year(s) after the age of 71.
After turning 71, although you cannot contribute to your own RRSP account, if you have a spouse, and he/she is under 71, you can make RRSP contributions to your spouse’s RRSP (Spousal) account up to your RRSP deduction limit. You can make spousal RRSP contributions until December 31 of the year your spouse turns 71.
The maximum that you can contribute to your spouse’s RRSP each year should be indicated on your annual Notice of Assessment. Note that if you have earned income after you turn 71, it will generate additional RRSP room and increase your RRSP deduction limit for the following year.
Your RRSP must mature by December 31st of the year that you turn 71. On maturity, you can choose to withdraw your RRSP, or transfer them to a RRIF (Registered Retirement Income Fund) account, or use them to purchase an annuity.
Withdrawal – the amount withdrawn is fully taxable in the year of withdrawal. The financial institution will withhold income tax based on the amount of withdrawal.
RRIF – a minimum monthly amount will have to be withdrawn, as calculated by the financial institution. The amounts are taxable but the financial institution will not withhold income tax on the minimum monthly amounts paid out to you. You can withdraw more than the calculated minimum but not less. The financial institution will withhold income tax based on the withdrawals in excess of the calculated minimum.
Annuity – guaranteed regular income for life as determined by the financial institution. The amounts are taxable, but the financial institution will not withhold income tax on the amounts paid to you.
The above information is of a general nature only and should not be relied upon for specific situations. Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below to set up a consultation.
