What's new for RRSPs and related plans

Beginning in 2007, a registered retirement savings plan (RRSP) must mature before the end of the year in which the annuitant turns 71 years of age (previously 69 years of age). Similarly, registered pension plans (RPPs) and deferred profit sharing plans (DPSPs) will generally be required to commence the payment of benefits to members by the end of the year in which the members turn 71 years of age.

As a result of the change to the conversion age:

• If the annuitant of a RRIF is not 71 years of age at the end of 2006, the annuitant may transfer any of the property held in the RRIF to an RRSP in 2007 or a subsequent year. However, the RRSP will still have to mature by the end of the year in which the annuitant turns 71 years of age, at which time the amount held in the RRSP may be transferred to a RRIF, used to purchase an annuity for life, or used to purchase an annuity spread over a number of years. If you transfer your RRIF to an RRSP, you will receive a T4RIF slip and an official RRSP contribution receipt. Report the RRIF amount on line 115 of your tax return and claim a deduction for the amount contributed using Schedule 7.
• The minimum RRIF withdrawal requirement will be waived in 2007 for RRIF annuitants turning 70 or 71 in 2007, and in 2008 for those turning 71 in 2008. This will allow individuals turning 70 or 71 in 2007 to benefit from the new, later RRSP maturation age. However, you can still choose to be paid the amount that otherwise would have been the minimum requirement.
• RRIF annuitant who turn 70 or 71 in 2007 and make RRIF withdrawals will be subject to tax withholding only to the extent that they would have been, had the minimum amount withdrawal requirement not been waived. Consequently, withdrawals up to the minimum amount that would otherwise be determined under the normal rules will continue to be exempt from tax withholding. However, you still have to include in your 2007 income all your RRIF withdrawals received in 2007.