RRSP withdrawals for people over 65

[frugalcanuck]

I am trying to figure out the most tax efficient withdrawal amount from an RRSP for a retiree over the age of 65 in Ontario. 

The CPP and OAS income for the year will be $13,357
The federal age amount base is $7,333 and net credit is $1,100
The net income threshold for age amount is 15% deduction for any amount over $36,976

So our current plan is to just withdrawal $23,619 ($36,976 - $13,357)
It is this amount to stay away from any net income threshold deduction.

Does this make sense or is there a more optimal amount to withdrawal?

Thanks in advance

[Prairie Stash]

You should also have a plan for all future years. Make a table of all the years until you're 90 (it starts getting ridiculous I realize), what will your withdrawals look like each year? Are you going to run out of RRSP or have a masive amount getting taxed heavy in the future? I plan on running mine dry.

If the plan is to run them dry, invest extra money in the TFSA for the future when the RRSP is gone.

You said "our", I assume you have a partner. Is that just your portion or the household? In other words, are you splitting income (over 65)?  I'm not an expert, you may have to convert the RRSP to a RRIF, so again it difficult to answer fully without knowing more details.

[bluebelle]

There is pension credit on eligible pension income which allows a taxpayer to claim a federal non-refundable tax credit on up to $2,000 of eligible pension income.   RRIF income is eligible, RRSP withdrawals are not, CPP and OAS payments aren't eligible either.....you may want to convert some of your RRSP to RRIF to allow you to claim this credit.  That's my plan when I get to 65.

Depending on the value of your RRSP, you are wise to start drawing down early, so you don't get into the situation of getting hit with a big tax bite in your later years (especially after the passing of one spouse).

[RetiredAt63]

There is pension credit on eligible pension income which allows a taxpayer to claim a federal non-refundable tax credit on up to $2,000 of eligible pension income.   RRIF income is eligible, RRSP withdrawals are not, CPP and OAS payments aren't eligible either.....you may want to convert some of your RRSP to RRIF to allow you to claim this credit.  That's my plan when I get to 65.

Depending on the value of your RRSP, you are wise to start drawing down early, so you don't get into the situation of getting hit with a big tax bite in your later years (especially after the passing of one spouse).

If the RRIF works you can convert an RRSP (or part of an RRSP) to a RRIF any time.  You don't have to wait for 71.  I don't think you even have to be 65, but check with CRA for that.

[Goldielocks]

In general,

1) Take enouch to fund the pension credit (covert to RRIF for up to $2k in  income, each).
2) Leave RRSP invested, tax sheltered as long as possible.
3) Move $$ from RRSP to TFSA's, keeping your individual incomes under $76k each  (NOTE, I ASSUME YOU DO NOT GET THE CCB - child benefit if you do, ignore #3).

#3 is intended to reduce lifetime taxes on your account... it avoids the OAS clawback by staying under $76k.  You aren't getting GIS, so you don't have to worry about that.  If your RRSP is quite large, you might be worried about having a very large account on the day the last survivor of you and your spouse dies.  Instant tax at top margins, possibly over 50% tax on your RRSP in your final return.   If you have a spouse, they can roll over the values without taxes, so it is only when the last survivor dies, and only impacts your beneficiaries at that point.

#3 is less important if your RRSP is a bit smaller.... as you are likely to eventually deplete it if it is small... but moving some of it into a TFSA each year is a great long term plan for keeping the value large for inheritance reasons.