RRIF Minimum Withdrawal Calculation: It is currently November 9, 2020. Your client, Reginald, was born on December 3, 1949 and his wife, Maribelle, was born on May 14, 1952. Reginald has an RRSP with a current balance of $428,000 invested in a GIC that will be worth $432,000 on January 1 of next year. Reginald and Maribelle do not need the funds to live on and, therefore, want to delay and reduce the amount that they need to withdraw from Reginald's account as much as possible.

What would the smallest required payment be from the account, and by what date must it be withdrawn?

Spousal RRIF Attribution: Tom contributed $1,500 to his wife's Spousal RRSP in December of 2019. His wife turned 67 in June of 2020 and converted her Spousal RRSP into a RRIF. On January 1, of 2021 the Spousal RRIF had a balance of $68,000 and his wife set-up withdrawals from the RRIF of $350 per month for all of 2021.

How much, if any, of the 2021 Spousal RRIF withdrawals will be attributed back to Tom as taxable income?

Term Annuities: Susan wants to purchase a 20-year term certain annuity that will provide at least $650 of income at the end of each month with the first payment starting one month after purchase.

If the prevailing nominal interest rate is currently 3.62%, how much will Susan have to pay for the annuity? What would be the approximate cost to Susan of a drop in the prevailing interest rate of 0.25%?

Life Annuities: James wants to purchase a life annuity with $275,000. His advisor has told him that based upon the annuity mortality tables, he has a life expectancy of 28.75 years and that the prevailing nominal interest rate for that type of annuity is currently 4.06%.

How much income will James' annuity provide at the end of each month, if the payments commence one month after purchase? Assuming that James' annuity does not have any indexing (inflation protection), what would the monthly payment equal, in today's dollars, at the end of the annuity if annual inflation was 2.5% over the life of the annuity?

Tax Treatment of Prescribed Annuities: Tim purchased a prescribed non-registered life annuity with $190,000. Based upon the annuity mortality tables, the number of yearly installments expected for the annuity is 22.35 and the monthly payments are $1,070. Tim's marginal tax rate is 36% and he would like to know how much tax he will have to pay on the payments each year.

Reverse Annuity Mortgage (RAM): Fred, age 73, and Wilma, age 71, own their home outright. It has a current market value of $520,000. The couple has a combined life expectancy of 87 years and would like to remain in their house for as long as possible - but need some extra income to help make ends meet. Real estate prices in their area have a long-term appreciation of 3.0% per year. Your firm offers a reverse annuity mortgage with the loan portion at a fixed interest rate of 5.69% and a monthly payment of $311 per $50,000 on a joint and last survivor life annuity. How much extra monthly income could Fred and Wilma generate with a reverse annuity mortgage product through your firm?

Answer rating: 100% (QA)

1 RRIF Minimum Withdrawal Calculation The minimum withdrawal from an RRIF is based on the age of the account holder and the value of the RRIF at the beginning of the year For the year the account hold... View the full answer