Are you saving enough for retirement?

[bizaro86]

Originally Posted by DoubleF

Depends what you mean by not a big tax advantage? If you're taking out RRSPs anyways and have no other pensions, converting a portion of the RRSP to RRIF allows for a non-refundable pension income amount tax credit, which is $2,000 and at 15% is worth $300.

Sure, at 65 in makes sense to convert to get the pension tax credit/pension income split.

My post said there's no advantage to converting BEFORE the year you turn 65, which I think is true. You can't get those benefits pre-65 and it makes the withdrawals mandatory (vs optional).

[Slava]

^ I think that is worth getting, but you can also just open a RRIF and convert some of the RRSP to get that. It's not an all-or-nothing situation. Open the RRIF, move $2000, get the tax credit, and keep the remainder in the RRSP.

[DoubleF]

Originally Posted by bizaro86

Sure, at 65 in makes sense to convert to get the pension tax credit/pension income split.

My post said there's no advantage to converting BEFORE the year you turn 65, which I think is true. You can't get those benefits pre-65 and it makes the withdrawals mandatory (vs optional).

I missed the before 65 part. My bad. You're right that you can't transfer or get the credit before then.

But I've still seen RRIF occur before age 65. Allows withdrawals to be automatic plus you can request to have amounts withheld and submitted for you for tax purposes (convenient for individual). We could split hairs on whether it's considered a big advantage, but to them it seems like a big one and to us, I think we'd agree there's no tax advantage for doing it before 65 but perhaps an administrative one depending on the situation.

[bizaro86]

Originally Posted by DoubleF

I missed the before 65 part. My bad. You're right that you can't transfer or get the credit before then.

But I've still seen RRIF occur before age 65. Allows withdrawals to be automatic plus you can request to have amounts withheld and submitted for you for tax purposes (convenient for individual). We could split hairs on whether it's considered a big advantage, but to them it seems like a big one and to us, I think we'd agree there's no tax advantage for doing it before 65 but perhaps an administrative one depending on the situation.

Sure. I agree there's a small administrative advantage to converting early if you're absolutely sure you're going to keep taking payments. I would never do that because I value the optionally of not taking them, but some like to keep things simple which I respect.

There might also be a psychological benefit for people thinking "every month i have $Xxxx as retirement income" from converting vs just taking money out of an rrsp as needed.