Transcript:
In this training, we will walk through how to model a common planning scenario for a RRIF meltdown in Voyant and show your client the potential benefits of this strategy.
A RRIF meltdown strategy can help illustrate how gradually withdrawing funds from registered accounts and moving them into tax-free accounts may affect a client’s long-term plan, taxes, assets, and legacy outcomes.
Create a What-If Plan
To begin, create a What-If plan so you can compare the client’s current outlook against the proposed RRIF meltdown strategy.
Go to the What-If section and create a copy of the client’s Base Plan. Give the plan a clear name, such as RRIF Meltdown Strategy, so it is easy to identify when comparing scenarios later.
Add TFSA Accounts
In the new What-If plan, create the TFSA accounts that will receive the transferred funds.
Go to Savings and Investments and add a new investment account for Paul.
Select a TFSA account type and create an empty account. Since no funds have been contributed yet, leave the balance at zero. You can also review and adjust the fee rate, growth rate, or other account assumptions as needed.
Click Save and Add Another to create a TFSA account for Marilyn. Again, leave the balance at zero and save the account.
You should now have the existing RRIF accounts and the new TFSA accounts included in the plan.
Create the Transfers
Next, create the recurring transfers from the RRIF accounts into the TFSA accounts.
Select the plus button, then choose Transfers.
Create a transfer to Paul’s TFSA. Select Paul’s RRSP or RRIF as the source account. Enter the specific transfer amount. In this example, we will use $7,000.
Set the transfer as recurring, then set the timing to begin at the plan start and end at Paul’s mortality, or when the source account runs out of funds.
Click Save and Add Another and repeat the same process for Marilyn’s TFSA.
Select Marilyn’s RRIF as the source account, enter the same transfer amount, and set the transfer as recurring. The timing can begin now and end at Marilyn’s mortality, or when the account runs out of money.
Click Done to save the transfers.
Confirm the Results in Year View
To confirm the strategy is modeled correctly, go to Year View.
In the cash flow details, you should see the transfers occurring at the bottom of the cash flow section.
In the Expenses section, you can review the tax withheld on the withdrawal. When expanded, you can see that the tax is being paid by the RRIF.
In the Investments section, you can confirm that contributions are being made into the TFSA accounts. You can expand the accounts to see where the funds are coming from.
You can also go to the Pensions section to review the withdrawals coming out of the RRIF accounts.
Compare the Strategy Against the Current Plan
To show the benefit of the strategy to your client, go to Let’s See and select Compare Plans in chart view.
From here, you can compare the asset charts side by side.
When you hover over the final year in the chart, you can compare the tax-free assets in the RRIF meltdown strategy against the lower available registered assets in the original plan.
This can help illustrate how gradually moving funds into TFSAs may affect the client’s long-term asset mix and tax-free savings.
Review the Legacy Impact
You can also compare the legacy outcomes of the two scenarios.
Go to Overview, then select Legacy.
Use Compare Scenarios to view the RRIF meltdown strategy and the original plan side by side.
In the RRIF meltdown strategy, you can review the estimated terminal tax and total wealth transfer after tax. You can then compare those results against the client’s current plan.
This view can help demonstrate the potential estate and tax impact of using a RRIF meltdown strategy.
Requesting Support
If you have any questions while modeling this workflow, click the client’s name in the top-right corner of the screen and select Request Support.
Enter your question into the text box and share client access so the support team can review the plan with the appropriate context.