A retired client, age 75, holds a large portion of their RRIF in Canadian equity dividend stocks. They need to meet their RRIF minimum withdrawal requirement of $25,000 for the year. The client is concerned about selling stocks in a down market. What is the most tax-efficient way for them to meet their RRIF minimum withdrawal, assuming they want to avoid selling their current holdings and have sufficient liquid funds in a TFSA?

Question: A retired client, age 75, holds a large portion of their RRIF in Canadian equity dividend stocks. They need to meet their RRIF minimum withdrawal requirement of $25,000 for the year. The client is concerned about selling stocks in a down market. What is the most tax-efficient way for them to meet their RRIF minimum withdrawal, assuming they want to avoid selling their current holdings and have sufficient liquid funds in a TFSA?

Answer options:

• Sell the required amount of Canadian equity dividend stocks from the RRIF.
• Withdraw $25,000 cash from their TFSA.
• Transfer $25,000 worth of Canadian equity dividend stocks in-kind from their RRIF to a non-registered account, and then sell them. ✅ Have their RRIF hold $25,000 as cash and pay it out to meet the minimum.

Correct answer: Have their RRIF hold $25,000 as cash and pay it out to meet the minimum.

Explanation: While 'in-kind' transfers to a non-registered account can meet the minimum, the simplest and most direct method to avoid selling specific holdings and use existing RRIF cash is to just pay out the cash. If the client wants to avoid selling, they would need to ensure there is sufficient cash in the RRIF from dividends or interest, or previously sold assets, to make the payment. Withdrawing from the TFSA does not meet the RRIF minimum withdrawal requirement, as these are separate accounts.