Question

The balance in mike's rrif is expected to grow by 7% annually. the value of the account at the beginning of the year is $345,000. mike turned 72 years of age october, 2013. he will withdraw the money on december 31, 2014. how much will the minimum withdrawal be?

a. $19,166
b. $20,000
c. $20,564

Answer 1

The minimum withdrawal from Mike's RRIF will be $340,050.

Step-by-step explanation:

To calculate the minimum withdrawal from Mike's RRIF, we need to apply the formula for the minimum withdrawal amount.

The formula is:

Minimum withdrawal amount = (Account balance at the beginning of the year) * (1 - Withdrawal rate)

Here, the withdrawal rate can be calculated as 1 / (100 + 72 - 72), which equals 1 / 100. Thus, the withdrawal rate is 0.01.

Substituting the values into the formula:

Minimum withdrawal amount = $345,000 * (1 - 0.01) = $345,000 * 0.99

Minimum withdrawal amount = $340,050

So, the minimum withdrawal for Mike will be $340,050.