Should I withdraw from an RRSP prior to age 69?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 26 May, 2003 | 1:00PM
Dear Expert:

I am now retired at age 63 and therefore have several years before I have to roll over my RRSPs. I have an indexed (cost-of-living minus 1%) "defined benefit" pension. Since I will not be earning any less with my pension than right now, is there any benefit to holding on to the RRSPs until age 69, or should I begin a systematic redemption of them, i.e. swap these assets to a non-registered account, at today's tax rates?

Expert Answer:

Because you will be earning the same amount once you start drawing your company pension (let's assume at age 65) as you are earning today, any withdrawals from your RRSP will attract the same amount of tax whether drawn today or in seven years' time (assuming marginal tax rates remain at current levels). On this basis, unless you need additional cash sooner it is better to defer the tax on the withdrawals as long as possible. That would mean waiting to mature the plan at age 69 and then withdrawing the minimum annual amounts via a registered retirement income fund (RRIF).

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Gena Katz

Gena Katz