Mr. and Mrs. Lee, both 70, are receiving maximum CPP/OAS. Mr. Lee’s RRIF is $600,000, and Mrs. Lee’s RRIF is $300,000. They also have combined TFSAs of $150,000. Their desired annual spending is $75,000, and they are concerned about the longevity of their RRIF assets and potential OAS clawback. What is the most tax-efficient income withdrawal strategy?

Question: Mr. and Mrs. Lee, both 70, are receiving maximum CPP/OAS. Mr. Lee’s RRIF is $600,000, and Mrs. Lee’s RRIF is $300,000. They also have combined TFSAs of $150,000. Their desired annual spending is $75,000, and they are concerned about the longevity of their RRIF assets and potential OAS clawback. What is the most tax-efficient income withdrawal strategy?

Answer options:

• Draw equally from both RRIFs and supplement with TFSA withdrawals to avoid OAS clawback.
• Prioritize drawing more heavily from Mr. Lee's larger RRIF initially, then switch to Mrs. Lee's and TFSAs.
• Maximize withdrawals from the TFSAs first, then take minimum RRIF withdrawals, ensuring even income splitting where possible. ✅ Implement RRIF income splitting up to the maximum allowable, and draw from Mrs. Lee's RRIF first due to the attribution rules.

Correct answer: Implement RRIF income splitting up to the maximum allowable, and draw from Mrs. Lee's RRIF first due to the attribution rules.

Explanation: RRIF income splitting allows a portion of Mr. Lee's RRIF income to be attributed to Mrs. Lee, potentially reducing their combined tax burden. Drawing from Mrs. Lee's RRIF first (if her income is lower) and ensuring income splitting optimizes their income levels to manage OAS clawback and overall taxation effectively.