The RRIF trap: how mandatory withdrawals trigger the OAS clawback in 2026

Saving diligently into an RRSP for forty years can create a tax problem at exactly 71 — the age at which withdrawals stop being your decision.

The mechanics

An RRSP must be converted to a RRIF or an annuity by December 31 of the year you turn 71. From the following year, a statutory minimum must be withdrawn: 5.28% at 71, rising to 6.82% at 80 and 20% at 95. The minimum is fully taxable regardless of whether you need the money.

Where it collides with OAS

Add maximum CPP of about $17,200 and OAS of about $8,800 to a $79,200 RRIF withdrawal and net world income reaches roughly $105,200. The 2026 clawback threshold is $95,300, so about $9,900 of that is exposed at 15% — a recovery of roughly $1,485, on top of ordinary income tax.

TFSA withdrawals do not count toward the threshold. RRIF withdrawals do. That single asymmetry is worth planning a decade around.

What to do in your sixties

1. Withdraw from the RRSP before 71, deliberately, in years when your marginal rate is low. Every dollar removed early lowers the forced minimum later.
2. Move the proceeds into a TFSA where possible. Same money, invisible to the income test.
3. Use your younger spouse’s age for the RRIF minimum calculation. It lowers the required withdrawal every year for the rest of your life.
4. Split eligible pension income to keep both partners under the threshold.

The counterintuitive part

Paying tax earlier than you must is usually wrong. Here it is often right, because the alternative is a permanently higher income floor from 72 onward — one that interacts with the clawback, with age credits, and eventually with the estate’s final return, where the entire remaining RRIF is taxed as income in a single year.