{"id":718294,"date":"2026-06-06T04:42:20","date_gmt":"2026-06-06T04:42:20","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/718294\/"},"modified":"2026-06-06T04:42:20","modified_gmt":"2026-06-06T04:42:20","slug":"my-wife-and-i-have-more-than-2-million-in-our-rrsps-how-can-we-pay-less-tax","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/718294\/","title":{"rendered":"My wife and I have more than $2-million in our RRSPs. How can we pay less tax?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Q: I am 64 years old, receiving around $1,000 annuity and still working. I have $1.2-million in my RRSP. My wife is 57 years old, retired, receiving a yearly pension of $34,000 and she has $1.3-million in her RRSP. We both have cash and TFSAs. What should we do to pay less tax?<\/p>\n

We asked Owen Winkelmolen, an advice-only planner, CFP, and founder of Adviice.ca<\/a>, to answer this one. <\/p>\n

You\u2019ve done very well accumulating significant registered assets, Mr. Winkelmolen said in an e-mail. But to avoid losing up to half of your Registered Retirement Savings Plan and Registered Retirement Income Funds to income tax and benefit clawbacks, he recommends you act quickly.<\/p>\n

\u201cBecause your RRSPs are sizable, if they are not drawn down fast enough there are three specific risks you will likely face in retirement,\u201d he said. <\/p>\n

Mr. Winkelmolen outlines the risks:<\/p>\n

Risk No. 1: Old Age Security clawbacks. \u201cThe combination of future RRSP\/RRIF withdrawals, pension income, annuity income and future CPP and OAS benefits will likely trigger OAS clawbacks of 15 per cent. If you are not careful, this will push your marginal effective tax rate to more than 40 per cent.\u201d<\/p>\n

Risk No. 2: Tax on estate. \u201cWhen taxed all at once as part of your estate, the RRSP\/RRIFs could face a marginal tax of more than 50 per cent. If they wait too long to draw down their RRSP\/RRIFs they will lose half of the balance to the Canada Revenue Agency.\u201d<\/p>\n

Risk No. 3: Loss of Control. \u201cFuture RRIF minimums could be so large that you effectively lose control of your retirement drawdown plan. You will be forced to make large withdrawals every year even if it triggers higher tax rates or OAS clawbacks.\u201d<\/p>\n

When should I switch from investing in my RRSP to my TFSA?<\/a><\/p>\n

Mr. Winkelmolen suggests balancing these risks with the fact that by drawing down too quickly, that will trigger OAS clawbacks or higher marginal tax rates now. <\/p>\n

\u201cA strategic RRSP\/RRIF meltdown is what you need to accomplish,\u201d he said. \u201cYou need to take control of your retirement drawdown plan before RRIF minimums force you into a drawdown plan.\u201d <\/p>\n

To get started, Mr. Winkelmolen suggested three specific opportunities to take advantage of as soon as possible:<\/p>\n

Early and aggressive RRSP meltdown: \u201cBefore OAS benefits start, there is an opportunity to draw more aggressively from the RRSP,\u201d he said. \u201cIn Ontario, for example, strategic RRSP withdrawals up to a taxable income of $107,785 would only trigger marginal tax rates up to 31.48 per cent.\u201d To implement this strategy, you will need to adjust your RRSP\/RRIF withdrawals each year to account for other sources of taxable income. The goal, he added, is to withdraw enough to stay within the 30 per cent tax brackets, but not higher. Extra cash flow can be used to maximize Tax-Free Savings Accounts, for early retirement spending or for gifts for kids or grandkids.<\/p>\n

Consider delaying OAS benefits. \u201cIf your RRSPs continue to grow with strong investment returns then you should consider delaying OAS until age 70. This provides more time to make larger withdrawals without triggering OAS clawbacks.\u201d The added bonus, he said, is that this also provides you with a higher OAS benefit in the future.<\/p>\n

Decrease RRSP meltdown when OAS begins: \u201cYour strategy will need to change,\u201d Mr. Winkelmolen said. \u201cThe size of your withdrawals will need to come down to avoid OAS clawbacks, which would add an extra 15 per cent OAS recovery tax (or clawback). You both need to ensure you make strategic RRSP withdrawals up to the OAS clawback threshold of $95,323 per person (in 2026), taking into account other income sources like pensions, annuity, CPP and OAS. Every province has different marginal rates, but in Ontario, for example, these withdrawals would be taxed at a marginal rate of 29.65 per cent but would avoid the extra OAS recovery tax.\u201d<\/p>\n

With a strategic retirement decumulation plan in place you will avoid unnecessary income tax and benefit clawbacks, and you will have a great retirement with lots of income for spending, travel and gifts, Mr. Winkelmolen said. \u201cThe important thing is that you put this plan in place as soon as possible.\u201d<\/p>\n

Do you want advice on a financial planning or retirement issue that\u2019s affecting you? Send us an e-mail<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Q: I am 64 years old, receiving around $1,000 annuity and still working.…\n","protected":false},"author":2,"featured_media":185056,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132,136],"class_list":["post-718294","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance","tag-r-fp"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/718294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=718294"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/718294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/185056"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=718294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=718294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=718294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}