Turning 71 in 2026? Your RRSP-to-RRIF conversion could trigger thousands in unexpected taxes if you miss this deadline

And the deadline is just the first hurdle.

Once that RRIF kicks in, you're forced to start taking mandatory withdrawals every year, even if you don't need the cash. This extra income is fully taxable and can grow large enough to trigger an OAS clawback, eating away at your government benefits.

Here’s how you can avoid these traps with a little bit of proactive planning.

What RRIF mandatory minimums actually look like

The first year your RRIF is open, you are not required to make a withdrawal. But you must start your withdrawals in the first calendar year after the RRSP to RRIF conversion. These minimum withdrawals are mandatory for each year for the rest of your life.

To understand how this works, consider how the mandatory withdrawal rate changes as you age. At age 71, the prescribed withdrawal rate is 5.28% (applied to the January 1 value of the account). By age 80, that rate rises to 6.82%, and by age 90, it reaches 11.92% (1).

Using these withdrawal rates and a RRIF worth $250,000, a retiree would need to withdraw a minimum of roughly $13,500 in the first year after the RRIF conversion. Remember, this sum is treated as income on top of the Canada Pension Plan (CPP), Old Age Security (OAS) and other sources of income — and fully taxable.

Each year, the mandatory withdrawal rate for RRIFs increases, regardless of market conditions. This means a down market does not reduce your tax obligation; it just reduces the asset base that future minimums are calculated against.

The OAS clawback trap

For retirees with meaningful RRSP balances, the compounding effect of rising RRIF minimums combined with CPP and OAS can push annual income above a threshold — forcing clawbacks that most people don't see coming.

How does this work? Most retirees expect to pay the standard marginal tax rate on their retirement earnings. In most cases, this means a retiree faces a tax rate of 30% and 40% on income earned (from CPP, OAS, investment earnings and RRIF withdrawals). But once your earnings exceed the OAS threshold (roughly $90,000 to $95,325 depending on the tax year), the government triggers a 15% recovery tax, commonly known as the "OAS clawback" (2).

Think of this clawback as a hidden surcharge. For every dollar you earn above that limit, you don't just owe income tax — you also lose $0.15 of your OAS pension. When you stack that loss on top of your regular taxes, your "effective" tax rate can skyrocket to 45% or 55%.

In 2026, the clawback begins once net income exceeds $95,323.

For retirees in their late 70s and 80s, when RRIF minimums are significantly higher and harder to control, this risk compounds.

While many Canadians may consider themselves free from worry when it comes to the OAS clawback, keep in mind that even middle-income seniors who experience a one-time spike in taxable earnings, say from a property sale, can get caught in OAS clawbacks and double taxation if the finances aren’t managed properly.

Strategies that can reduce the damage

Consider withdrawing from your RRSP before it’s mandatory

Canadians who are in a lower tax bracket between ages 65 and 71 — before CPP and OAS are both flowing — can voluntarily draw down their RRSP in advance. That reduces the RRIF balance and, by extension, all future mandatory minimums.

Use your spouse's age if it's lower

Before your first RRIF payment is made, you can choose to use your spouse's age to calculate the minimum withdrawal — a one-time election that can meaningfully reduce how much you are required to take out each year.

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