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1/3/2023

​Minimum and maximum annual withdrawals limit for Variable Benefit Payment accounts

Do you hold a CSS Variable Benefit (VB) Payment account? 

Did you know that an annual minimum and maximum withdrawal amount is calculated for every VB Payment account each January 1? You are required to withdraw an amount between the minimum and maximum withdrawal amounts each year.  

  • The minimum withdrawal rate is based on your age or your spouse’s age, whichever was elected when you set up your VB Payment account. The minimum withdrawal rate is determined by the Income Tax Act (ITA) and, in part, mirrors the rules related to a registered retirement income fund (RRIF). You must start withdrawing at least the minimum amount no later than the year you turn 72. Until the calendar year that you turn 72, the minimum amount does not apply.   

  • The maximum withdrawal rate is based on your age. The maximum withdrawal rate is determined by pension legislation. At any given age, you cannot withdraw more than the maximum amount. The maximum withdrawal rate only applies to the locked-in portion of your VB Payment account. 

VB Payments are taxable income. For information about taxes, please refer to the CSS article “Attention retirees!” 


Calculate your estimated minimum and maximum amounts 

You can estimate the upcoming annual minimum and maximum limits for your VB Payment account using this calculation: 

Step 1. 

  • Estimate your December 31 balance 

Step 2. 

  • Use the Rate Table below to determine your minimum withdrawal rate 
  • Multiply your minimum withdrawal rate by the balance you estimated in Step 1 
  • That answer is your estimated annual minimum withdrawal amount 

Step 3. 

  • Use the Rate Table below to determine your maximum withdrawal rate 
  • Multiply your maximum withdrawal rate by the balance you estimated in Step 1 
  • That answer is your estimated annual maximum withdrawal amount 


Rate Table 

The following table illustrates the minimum and maximum rates. Please use this table as you continue to read through this article.


Note: The rates provided in the table above are approximate. 

Determine your minimum withdrawal rate 

Until the year you turn age 72, there is no minimum annual withdrawal required from your VB Payment account. Beginning the year in which you turn 72, there is a minimum amount that you must withdraw each year.  

Your minimum withdrawal rate will be found in the above Rate Table in the column called “VB Payment Account Minimum.”


Determine your maximum withdrawal rate 

A maximum withdrawal rate applies only to the locked-in portion of your VB Payment account. The rules are as follows: 

  • Under Saskatchewan pension legislation, the maximum withdrawal rate is 100% of your account. In other words, there is no maximum amount limit for Saskatchewan pension funds. In the Rate Table, see the column “VB Payment account Maximum – Saskatchewan.” 

  • Under Alberta, British Columbia and Ontario pension legislation, the maximum withdrawal rate is the greater of the previous year’s investment earnings, or the maximum withdrawal rate as illustrated in the Rate Table, found in the column “VB Payment account Maximum – Alberta, British Columbia, Ontario.” 

  • Under Manitoba and Nova Scotia pension legislation, the maximum withdrawal rate is the greater of the previous year’s investment earnings, or the maximum withdrawal rate as illustrated in the Rate Table, found in the column “VB Payment account Maximum – Manitoba, Nova Scotia.”
     
  • Under Federal pension legislation, the maximum withdrawal rate is illustrated in the Rate Table, found in the column “VB Payment account Maximum – Federal.” 

Conclusion 

You can calculate your own estimates using the above tips and tools.   

If there is a change to your VB Payments due to the changes of minimum and maximum withdrawal requirements, you will receive a communication from CSS in mid- to late January that outlines your actual new VB payments for the year.