Understanding The RRIF Re-Contribution Rules

by Tax Guy - Burlington Accountant on February 21, 2009 Print This Post Print This Post

On November 28, 2008, the government announced that it was lowering the minimum withdrawal rules for RRIFs retroactively for 2008 only. The intent was to provide some relief to seniors who would have withdrawn their RRIF funds before the market crash in October 2008.

The proposed rule change reduces the minimum RRIF withdrawal amount for 2008 by 25%. Since the minimum withdrawal amount for 2008 was based on the RRIF balance on January 1st, 2008 and many seniors has already withdrawn their minimums for the year, the proposal includes a provision to allow seniors to re-contribute up to 25% of their original RRIF minimum back to an RRSP or their RRIF. This re-contribution may be made until March 1st or 30 days following the changes receiving Royal Assent (whichever is later).

The CRA is permitting financial institutions to allow the se re-contributions before the legislation take passes and is in essence is administering the rules as if they were law. At the time of writing, the legislation had passed second reading and need only pass third reading and receive Royal Assent before becoming law.

For more infomration see the CRA Q&A here.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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w.beale April 17, 2009 at 8:07 pm

can you tell me deadline date for making a re-contribution to my rrif?

Tax Guy April 17, 2009 at 8:43 pm

@ W. Beale:

The deadline was April 14, 2009.

Trish Hedstrom April 24, 2009 at 7:57 am

I turned 71 in 2008, I bought a GIC to be applied to my RRSP on Feb 27/09. My financial institution advised me I was not illegible for this….I called CRA who advised I was. My financial institution still claimed I was not..I had my MP check this out and was advised I had to purchase this before the end of Dec/08….The bank canceled the GIC then I had witholding tax taken off. The bank had me complete a T3012A.Being CRA gave me wrong information, I question why they didn’t advise me of this re-contribution as I just was advised of this by a CA yesterday….

Is there anyway I can rebut this problem caused by CRA?

Tax Guy April 24, 2009 at 7:33 pm

A taxpayer must convert their RRSP to a RRIF before December 31 of the year in which they turned age 71. After that date no more contributions may be made.

The T3012A allows you to withdraw the ineligible over-contribution and not have tax withheld. It appears the bank provided you with the form to reverse the ineligible contribution.

If the person at the CRA did make a mistake there’s really nothing you can do. Making an additional contribution at this is illegal and will unfortunately not be allowed.

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