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RRIFmetic and the LIF/LRIF/new LIF

( this is now much improved in V2.4- see below)

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The program does contain both the LIF (old and new) and LRIF maximum withdrawal factors, including annuitizing the (old) LIF at 80. Of course, the RIF, LIF and LRIF all behave the same as far as minimum withdrawals are concerned.

For most situations it is reasonable to lump the LIF/LRIF/RSP/RIF together since from a tax point of view they behave identically.

When you bring down the 'type' selector button under "RRIF", the LIF and LRIF tags appear. This is how you turn the RIF entity into LIF or LRIF format.

To prove/show that the LIF factors are indeed in the program, here is what you do....

  • zero out the RSP amount
  • put the amount of the LIF or LRIF in the box below the RRSP and click 'type' to set the LIF or LRIF.
  • smooth, forcing a target of $10million!!.
The resulting registered funds will exactly track the behaviour of the LIF/LRIF as it would unfold if drawn down at maximum.

OK, now that you know the max withdrawal factors are there, so what? Well, the first thing to realize is that for a normal 'smooth' or 'amortize' which forces a normal smooth profile (i.e one which doesn't have a large lump of net income coming out), the max limits very seldom get hit. If the client has either or both nonreg or normal reg funds, then the LIF maximums if hit, can always be supplemented by those other funds. This is how it should be explained to the client.

1. The LIF/LRIF RRIF Proration Method

If you have both RIF and LIF/LRIF funds (the normal situation),
  • enter the RIF funds in the upper RSP box and LIF funds in the lower,
  • and set the 'RIF starts at' age to the clients current age
  • smooth or amortize as normal
Now you have a 'mixed' RIF/LIF pool of capital.

The program doesn't track the two elements separately... it simply lumps them together and reports them as a "Registered Capital (Open plus Locked In)" Report and simply pro-rates the two entities. The results will be accurate however the LIF/LRIF won't be pulling down at maximum.

2. The LIF/LRIF projected at Maximum Withdrawal Method

(NEW... this process- tracking the behaviour separately) can now be automatically invoked in the new Version 2.4 Fall 04 release.

At the point of computing, if the program sees some non-LIRA capital (RRSP and or nonreg) it will ask if you wish the LIF/LRIF to be depleted at maximum withdrawal.

A prompt will pop up. If you choose 'yes', then the LIRA will draw down at maximum. If the program senses salary and/or employer's DCPP contributions in the de grid, then it will ask if you wish to allow the LIRA to grow before drawing down.

It will prompt for that 'start to drawdown' date.

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