Certified Financial Planner (CFP) Practice Exam · Question
Sarah turned 72 on July 1, 2023. Her RRIF balance on December 31, 2022, was $500,000. What was her minimum RRIF withdrawal for 2023, based on the prescribed minimum withdrawal factors from the Income Tax Act?
For age 72, the prescribed minimum withdrawal factor is 1/18, or approximately 5.56%. The minimum withdrawal is calculated as the RRIF balance at the end of the
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Question: Sarah turned 72 on July 1, 2023. Her RRIF balance on December 31, 2022, was $500,000. What was her minimum RRIF withdrawal for 2023, based on the prescribed minimum withdrawal factors from the Income Tax Act?
Answer options:
- $25,000
- $26,316 ✅ $27,778
- $30,000
Correct answer: $27,778
Explanation: For age 72, the prescribed minimum withdrawal factor is 1/18, or approximately 5.56%. The minimum withdrawal is calculated as the RRIF balance at the end of the previous year ($500,000) multiplied by this factor. So, $500,000 * (1/18) = $27,777.78, which rounds to $27,778. This is a mandatory withdrawal to ensure funds are distributed.
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