09/09/2026
Canada: RRIF Withdrawals Can Trigger OAS Clawback
Many retirees are surprised to learn that RRIF withdrawals can have a direct impact on Old Age Security (OAS) payments. As a tax specialist and financial advisor with over 25 years of experience supporting the Canadian community, I’ve seen firsthand how these rules can affect retirement income planning. For 2026, any RRIF withdrawals are treated as taxable income—if your net world income rises above $95,300, OAS recovery tax kicks in at roughly 15% on the excess. For example, if your income jumps from $90,000 to $110,000 due to a $20,000 RRIF withdrawal, you could face about $2,200 in recovery tax, with the total effective tax rate nearing 40%. It’s important to remember that the 30% bank withholding often doesn’t reflect the entire tax picture, as OAS reductions usually show up later.
Careful planning goes a long way: estimating your full-year income, splitting withdrawals over multiple years, making use of pension-income splitting, or moving funds to a TFSA (which doesn’t affect OAS) can help minimize unwanted surprises. My approach is always to empower you with knowledge so you can make decisions that fit your long-term goals and maintain your financial well-being in retirement.
