On March 18, 2020, the Government of Canada announced portions of its COVID-19 Economic Response Plan, including details of Bill C-13, the COVID-19 Emergency Response Act which included proposed changes to the calculation of the 2020 required minimum withdrawal for registered retirement income funds (RRIFs). Recognizing current market conditions may impact many seniors’ retirement savings, the bill reduces minimum withdrawals from RRIFs for 2020 by 25%.

To help clients understand the impact of these changes on their clients’ RRIFs, CWB Trust Services has prepared the following Frequently Asked Questions:

1. How will the reduced minimum apply for an annuitant that is transferring their RRIF from one institution to another?
The relinquishing institution should pay the minimum unless instructed otherwise by the annuitant. The annuitant can request the minimum payout to be reduced by 25% less than the original calculated amount. For annuitants who do not choose to reduce their minimum payments, the original calculated minimum can still be applied without withholding tax.

2. How will the reduced minimum apply for annuitants with scheduled payments?
Annuitants may request to reduce their remaining schedule of payments to meet the reduced minimum amount.

3. For investors who have already received their full 2020 minimum, can they recontribute the 25% reduction back to their RRIF?
At this time, CRA has indicated that re-contributions of the 25% will not be permitted.

4. Is this reduction mandatory or optional?
The 25% reduction in the annual minimum payment is optional.

5. Are Life Income Fund minimum payments included in this?
Yes, LIFs would follow the same minimum requirements and options.

6. Are these changes effective January 1, 2020 or on a go-forward basis?
This change is applicable for 2020 only and only in those situations where the full minimum amount has not yet been paid to an annuitant.

7. What happens if annuitants have already taken their annual minimum payment prior to March 2020?
This change will not apply to them as they have already received their 2020 minimum required payment.

8. Is the taxable amount on any excess based on the unreduced minimum, or the newly reduced 25% minimum?
Withholding tax will be due on amounts greater than the unreduced minimum amount.

Clients looking for additional clarity on the Act and its impacts on RRIFs are encouraged to visit the Government of Canada’s official page here: