Gordon Pape is trying to spread the word that a Deadline looms for seniors to put money back into their RRIFs.

Finance Minister Jim Flaherty granted seniors a one-time reduction of 25% in the minimum RRIF withdrawal requirement for 2008. But the country’s financial institutions had trouble getting their computer systems to accommodate the reduction. Relatively few seniors were able to take advantage of the supposed tax break.

Ottawa decided to allow people to repay up to 25% of their 2008 RRIF minimum withdrawal and claim a tax deduction for that amount. The legislation allowed for RRIF recontributions to be made up to 30 days after the law received parliamentary approval, which occurred on March 12th. Because Easter Sunday and Easter Monday fall on the 13th and 14th, Pape concludes that you have until April 14th to put money back into your RRIF.

You can check the full article for what tax savings may apply in your case.

As others have noted, normally with RRIFs, you have to get it right the first time.

At age 71, they yank away your retirement investing safety net. Arrange your registered retirement income fund (RRIF) so that you’re protected as much as possible against the kind of stock market drop we’ve seen in the past six months.  By the end of the year in which you turn 71, you must convert your registered retirement savings plan into a RRIF. With RRSPs, you have some protection if the markets go wrong. You can toss in some extra cash if you have the contribution room, and for many people there’s the comfort of knowing they have years to go before they dip into their retirement savings.

With a RRIF, however, you can’t put any new money in and you must withdraw a set minimum amount of money every year. Investing mistakes matter more with RRIFs, which means it’s crucial to build them properly at the beginning.

Financial adviser Peter Andreana suggests a 3 segment approach:

1. A high-interest account with three years of living expenses.
2. A somewhat riskier mix of cash, bonds and stocks.
3. Mostly stocks, but some bonds.

As time goes by and a client starts to use up his or her cash to cover living expenses, the advice is to move some money from Segment Two into Segment One, and from Segment Three into Segment Two.

The goal is to balance the long-term growth potential of the stock market while maintaining short-term cash security. The closer you are to needing the money, the more conservative you must be.  Given the lack of flexibility in RRIFs, it seems a prudent way to cover your financial retirement needs.

Technorati Tags: Gordon Pape, Registered Retirement Savings Plan, rrif