Mandatory RRIF withdrawals are playing havoc with seniors forced to cash in some of their drastically depleted investments to meet the mandatory requirement and pay tax on it. Wihdrawals are based on the value of the investments on January 1, 2008. The TSX composite index is down 44% from that date. The mandatory wihdrawal forces people to liquidate large portions of their investment portfolios, making it drastically more difficult to recover from the market plunge.
We must get relief from this injustice. Please write to the Finance Minister and copy your local MP, urging him to act immediately.Mandatory withdrawals are no longer relevant with longer and healthier lifespans for most Canadians.
Below is a copy of an email I sent to the Minister of Finance.
The Honourable Jim Flaherty, Minister of Finance
I was perturbed to see no reference in the Speech from the Throne about relief for seniors forced to withdraw and pay tax on an arbitrary amount for RRIFs drastically depleted from the precipitous market fall.
At December 31, 2007 (the last date for the index before January 1, 2008) the TSX composite index stood at 13833. As of the close yesterday it was 7724.76, a drop of 44 %. And no one knows how low the index will go before the year end.
The effective rate for mandatory withdrawal is now 10.67% at age 71, 12.6% at age 80 and a whopping 28.8% at age 94. How are people going to recover their market losses when they are forced to withdraw such exhorbitant amounts?
Seniors have worked hard and contributed financially and socially to Canadian Society for many years. Many continue to do so through their voluntary charitable activities. They have paid their dues and are entited to enjoy the fruits of their labour in their retirement. Yet not only are their savings depleted from the market plunge, their own government is forcing them to drastically deplete their dwindling nest eggs by applying arbitrary and outdated rules.
Mr. Finance Minister, it is time to do away with mandatory RRIF withdrawals or at the very least grant a two-year moratorium to allow seniors to recoup some of their losses,and reduce the age-based rates to more reasonable levels. In the interest of fairness which I’m sure your government is committed to, I urge you to grant immediate relief for this distressing problem for seniors.
2738 Westake Drive
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