By Allan Norman, MSc, CFP, CIM on September 2, 2026 Estimated reading time: 5 minutes

The ripple effect of RRIF withdrawals

By Allan Norman, MSc, CFP, CIM on September 2, 2026 Estimated reading time: 5 minutes

You may be surprised how much RRIF income increases your tax bill after age 71. Here are some ways to control the damage.

My first RRIF withdrawal pushed up my taxes more than I expected and I’ve now been hit with quarterly instalment payments from the Canada Revenue Agency (CRA). I’m still working past age 71, like a lot of people these days, either by choice or necessity, on top of the mandatory withdrawal. I am not sure most people are aware of all of the unintended consequences of mandatory RRIF withdrawals.  

Hi John. You are right to raise this because registered retirement income fund (RRIF) withdrawals can cause several unexpected consequences. Higher RRIF income can increase your tax bill, trigger Old Age Security (OAS) recovery tax, reduce income-tested tax credits such as the age amount, and affect certain provincial benefits. It can also lead to CRA instalment payments if not enough tax is paid during the year.

Having to make instalment payments is an inconvenience and/or a surprise for people who have received a paycheque throughout their careers. The reduced value in credits may be modest, but it still reduces after-tax income. The bigger financial hits come from clawbacks, and for those that qualify, reduced provincial benefits.    

The problem with the RRIF withdrawals is that the total withdrawn is taxed as ordinary income, like a paycheque. That taxable income is then stacked on top of your other income, which in your case, John, is CPP/QPP, OAS, and your salary. If you are saving or investing in a non-registered account, the interest,........

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