We will have more info as these rules get rolled out, however it looks like the 2019 Federal Budget introduced measures that will allow individuals to stretch their RRIF accounts even further into retirement. By allowing Canadians to invest in Advanced Life Deferred Annuities (ALDA) within their RRIF plans, taxpayers will be able to further defer income up to the age of 85. This is in contrast to the current withdrawal age limit of 71.
ALDAs will be a qualifying investment not only within RRIF plans but also within RRSP, RRIF, DPSP, PRPP and defined contribution RPP.
This is how it seems to work based on my reading:
- current RRIF minimum payment calculations will not include ALDA assets
- the taxpayer is subject to a 25% maximum amount of ALDA in a specific plan
- if the ALDA grows in value and exceeds 25% of the plan it will not be required to be liquidated
- current ALDA limits will be $150,000 for all qualifying plans indexed for inflation
- specific requirements must be met for the annuity to qualify as an ALDA
Upon death the ALDA will roll to a surviving spouse just like traditional RRIF accounts.
Similar to TFSA and RRSP overcontribution penalties the new ALDA rules include penalties for those that exceed their 25% maximum within defined plans. The penalty will be 1% a month plus interest on the excess.
We will follow up with additional details as they become available.