Mr. Chen, 68, is developing his decumulation strategy. He has $600,000 in his RRIF, $200,000 in a TFSA, and $100,000 in non-registered investments. He projects needing $40,000 annually from his investments after receiving CPP and OAS. He anticipates a 4% average withdrawal rate and a 5% investment return. Which withdrawal sequencing strategy is generally recommended for optimizing tax efficiency and preserving capital for the longest duration?

Question: Mr. Chen, 68, is developing his decumulation strategy. He has $600,000 in his RRIF, $200,000 in a TFSA, and $100,000 in non-registered investments. He projects needing $40,000 annually from his investments after receiving CPP and OAS. He anticipates a 4% average withdrawal rate and a 5% investment return. Which withdrawal sequencing strategy is generally recommended for optimizing tax efficiency and preserving capital for the longest duration?

Answer options: ✅ Withdraw from RRIF first, followed by non-registered, then TFSA.

• Withdraw from non-registered first, then RRIF, then TFSA.
• Withdraw from TFSA first, then RRIF, then non-registered.
• Withdraw equally from all three accounts simultaneously.

Correct answer: Withdraw from RRIF first, followed by non-registered, then TFSA.

Explanation: A common strategy for tax-efficient decumulation is to prioritize drawing from the RRIF first due to its mandatory minimum withdrawals and taxable nature. Next, withdraw from non-registered accounts, managing capital gains. The TFSA should be preserved as long as possible due to its tax-free withdrawals and growth, making it a valuable emergency fund or late-retirement resource.