Mandatory RRIF Withdrawals
Compulsory RRIF withdrawals are creating havoc for many seniors. They have watched helplessly as their investments tumbled in value. Now before yearend they are forced to withdraw funds from their depleted investment portfolios.
The original conditions under which mandatory RRIF withdrawals – many people being in ill heath and dying a few years after retirement – have been replaced by improved health and a steadily increasing age for mortality. Most seniors enjoy a healthy, active lifestyle for many years after retirement.
Still, they are forced to withdraw money from their investments and pay tax on it. Worse, the amount to withdraw is based on market values on January 1, 2008. Forced withdrawal in our currently depressed market will make it difficult to restore our investments to pre-meltdown levels.
CARP advocates eliminating mandatory RRIF withdrawals in the long term and an immediate moratorium on withdrawals.
It’s imperative that as many people as possible write or email Finance Minister Flaherty to express their concerns about this unfair tax law, with a copy to their local MP.
Below is a copy of an email I sent to Mr. Flaherty.
Bruce Bird, Chair Fraser Valley/White Rock chapter CARP
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plunge, their own government is forcing them to drastically deplete their dwindling nest eggs by applying arbitrary and outdated rules.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. Respectfully Bruce Bird 2738 Westake Drive Coquitam BC V3C 5J7 (778)284-1189 [email protected] Minister Flaherty to express their concerns about this unfair tax law, with a copy to their local MP.
Below is a copy of an email I sent to Mr. Flaherty.
