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By Allan Norman, MSc, CFP, CIM on April 22, 2025
Estimated reading time: 5 minutes

By Allan Norman, MSc, CFP, CIM on April 22, 2025
Estimated reading time: 5 minutes

Yes, your estate will pay a high rate of tax on your RRIF when you die. But it usually pays to keep the account intact and benefit from tax-free compounding if you can.

Is it a good idea to withdraw more money monthly than one needs from one’s RRIF? What about beginning a regularly automated transfer of this extra money to one’s non-registered investments so that there is less money in the RRIF account upon death? As a result, the estate will be taxed less (by slowly moving it from the RRIF to the non-registered investments as one ages), instead of the RRIF portion of the estate being taxed at 50% upon death. Note that this person has contributed the maximum yearly amount into their TFSA so there is no room left there.

—Andrea

Hey Andrea, this is a good question. In most cases I would say no. It’s not a good idea to draw extra money from your registered retirement income fund (RRIF) and invest it in a non-registered account just to pay less tax in your estate, unless your goal is to pay less tax. That may sound like a contradiction, but I’ll explain that.

Before I give you my thoughts, I have to ask: What is your real goal? Is it to have your estate pay less tax, or is it to maximize the amount of wealth you leave to your beneficiaries? If you want to minimize tax in the estate, you could leave it to charity or spend and/or give it away before you die.

I get the sense from your questions, though, that you want to try to maintain the value in........

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