Starting the year after you open a Registered Retirement Income Fund (RRIF), you must withdraw a minimum prescribed annual amount, taxable as income.

When the required annual amount is enough to support your retirement, withdrawing only the minimum can make financial sense. You limit your tax bill for the year and leave more RRIF mutual fund assets to grow tax-deferred.

However, sometimes you may come out ahead tax-wise by withdrawing more than the minimum, even when you don’t need it.

Take the case of a single, divorced or widowed retiree who will eventually have remaining RRIF assets in their estate. Without the option of having RRIF assets rolled over tax-deferred to a spouse, they seek other tax-saving measures to maximize the inheritance they leave to their heirs. This retiree makes annual RRIF withdrawals up to the limit of their current tax bracket and contributes the unneeded after-tax funds to mutual funds in their Tax-Free Savings Account (TFSA), provided there is contribution room.

The tax paid on this RRIF income can be less than the tax their estate would have owed, leaving a greater amount for their heirs.