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Variable Benefit Payment Calculator

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Canada Revenue Agency stipulates that a minimum payment must be withdrawn from your Variable Benefit each year and reported as income.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

This Variable Benefit calculator assumes the following

That you started your Variable Benefit after 1992
Using the Minimum Amount Payment option - that your payments will begin on January 1st of the year following the date you have entered as the Start Date. If you wish to delay or receive payments sooner, simply enter the appropriate date. Keep in mind that the Start Date you use should be no later than December 31 of the year you turn 71 in order that your minimum payment will begin in the year you turn 72..
Using the Minimum Amount Payment option - that you will not elect to take payments in the year you open/start the Variable Benefit since this would result in exceeding the minimum amount and would be subject to withholding taxes. If you do elect to take payments in the year you open/start the Variable Benefit, please use the Fixed Payment Option on this calculator.
That your Variable Benefit payments happen at the beginning of each month with interest compounded annually.

Definitions

Birth date

Enter your date of birth in Month/Day/Year format. Your age at the beginning of the year is calculated and displayed on the Report.

Start date

This calculator assumes that your payments will begin on January 1st of the year following the date you have entered as the start date. If you wish to delay or receive payments sooner, simply enter the appropriate date. Keep in mind that you must start distributions no later than the end of the year in which you turn 72 and that this calculator calculates your payments starting January 1st of the year following the date you have entered as the start date.

Initial investment amount

The initial investment you have placed (or will place) in your Variable Benefit plan.

Interest rate

Annual rate of return on your Variable Benefit.The Capital Pension Plan uses a 6% long-term return for portion invested in the Diversified Fund and 2% long-term return for portion invested in the Pre-Retirement Fund.

Payment calculations

This calculator allows you to find your Variable Benefit payment in one of three ways:

If you choose "Minimum required payments", only your minimum required payment will be calculated. Your required minimum payment will change each year as you grow older. We assume that you will not elect to take payments in the year you start the Variable Benefit since this would result in exceeding the minimum amount and would be subject to withholding taxes. If you do elect to take payments in the year you open the Variable Benefit, please use the Fixed Payment Option.
Note: For individuals turning age 70 or 71 in 2007 and for those turning 71 in 2008, the minimum withdrawal from a Variable Benefit for those years will be zero. This is based on legislation. For more information, please refer to the following link to Canada Revenue Agency's website: http://www.cra-arc.gc.ca/tax/registered/budget2007-e.html#T4RIF
The "Maximum payment for a fixed number of years" calculates your monthly and annual payment based on a fixed number of years that you enter.
The "Fixed monthly payment" allows you to select a fixed monthly payment and calculate how long your Variable Benefit will last. If you have requested a payment in a partial year (i.e. Start Year), you should use the Fixed Monthly Payment option.
For monthly payments and maximum payments check here to start payments immediately
For these two types of payments, check this box to have payments begin immediately (as of the 1st of the month next whole month). Unchecked will delay payments until the Jan. of the following year