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A Variable Benefit is essentially a P-RRIF/RRIF except your funds remain invested with the Capital Pension Plan. You can make periodic withdrawals while the remaining balance remains tax deferred. The property under a Variable Benefit is created from a transfer of funds from an RRSP or another Variable Benefit. The funds in a Variable Benefit are tax-deferred. Amounts paid out of a Variable Benefit are taxable on receipt.
It is mandatory that you convert all your RRSPs by December 31st in the year you turn 71. The latest you are allowed to take your first payment is December 31st in the year you turn 72, however, the payment must be at least the full annual minimum* amount.
Canada Revenue Agency stipulates that a minimum payment must be withdrawn from your Variable Benefit each year and reported as income. This minimum annual payment is taken from a schedule that is based on your age or the age of your spouse.
For more information, including the factors used, please consult the following link to Canada Revenue Agency's website: http://www.cra-arc.gc.ca/E/pub/tp/ic78-18r6/ic78-18r6-e.txt
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