Which statement describes RRIF minimum withdrawal requirements?

Which statement describes RRIF minimum withdrawal requirements?

• A. There is no minimum withdrawal requirement for a RRIF.
• B. There is a fixed rate of tax on RRIF withdrawals regardless of income.
• C. Withdrawals from a RRIF are taxed as ordinary income in the year they are withdrawn.
• D. RRIF withdrawals are allowed only after death.

Answer: (C)

The main idea is how RRIF withdrawals are taxed. When you take money out of a RRIF, that amount is added to your taxable income for the year and taxed at your regular marginal tax rate. This is why the correct statement describes RRIF withdrawals as taxed as ordinary income in the year they’re withdrawn. There is a minimum withdrawal requirement, but that relates to how much you must take out each year, not the tax rate itself. The tax on those withdrawals isn’t a fixed rate, so it isn’t a fixed percentage regardless of income. And RRIF withdrawals can be taken during life, not only after death.

The main idea is how RRIF withdrawals are taxed. When you take money out of a RRIF, that amount is added to your taxable income for the year and taxed at your regular marginal tax rate. This is why the correct statement describes RRIF withdrawals as taxed as ordinary income in the year they’re withdrawn.

There is a minimum withdrawal requirement, but that relates to how much you must take out each year, not the tax rate itself. The tax on those withdrawals isn’t a fixed rate, so it isn’t a fixed percentage regardless of income. And RRIF withdrawals can be taken during life, not only after death.