Mr. Henderson, 72, is drawing income from his RRIF. He wants to optimize his tax situation and asks his mutual fund representative about pension income splitting with his spouse, who is 68 and has lower income. What is a key consideration for pension income splitting with a RRIF?

Question: Mr. Henderson, 72, is drawing income from his RRIF. He wants to optimize his tax situation and asks his mutual fund representative about pension income splitting with his spouse, who is 68 and has lower income. What is a key consideration for pension income splitting with a RRIF?

Answer options:

• Only RRIF payments received before age 65 are eligible for pension income splitting. ✅ RRIF payments are generally considered 'eligible pension income' for individuals aged 65 or older, allowing for income splitting.
• Pension income splitting is only applicable to defined benefit pension plan income, not RRIF withdrawals.
• Splitting RRIF income is only allowed if both spouses are over the age of 71.

Correct answer: RRIF payments are generally considered 'eligible pension income' for individuals aged 65 or older, allowing for income splitting.

Explanation: For individuals aged 65 or older, RRIF payments are generally considered 'eligible pension income' and can be split with a spouse to reduce the couple's overall tax liability. This is a common strategy to lower taxes in retirement.