I have a gap between retirement and CPP/OAS where I want to deliberately draw down RRSPs beyond spending needs to optimize lifetime tax — melting as much as possible at a lower bracket before government benefits fill it. Proceeds should route to TFSA and non-registered, not spending.

Two questions:

1. Does the bracket top-up entry actually force withdrawals when there's no spending deficit, or does it only fire when cash is needed?
2. If I want to control meltdown pace more aggressively than bracket top-up allows — e.g. target a specific annual withdrawal amount regardless of spending — what's the recommended way to set that up while routing surplus to savings vehicles rather than the spending bucket?

What I've tried so far:

• Bracket top-up entry on the RRSP — unclear whether it's actually firing in gap years where spending is already covered by minimums
• Forced spending buckets paired with matching automatic savings entries into TFSA — this moved money but routed it through spending rather than cleanly repositioning it, which distorts the plan's accuracy
• Fixed dollar withdrawal entries — workable but requires manually estimating the right amount rather than letting MR optimize dynamically

gregariousApples0 wrote:

I have a gap between retirement and CPP/OAS where I want to deliberately draw down RRSPs beyond spending needs to optimize lifetime tax — melting as much as possible at a lower bracket before government benefits fill it. Proceeds should route to TFSA and non-registered, not spending.

Two questions:

1. Does the bracket top-up entry actually force withdrawals when there's no spending deficit, or does it only fire when cash is needed?
2. If I want to control meltdown pace more aggressively than bracket top-up allows — e.g. target a specific annual withdrawal amount regardless of spending — what's the recommended way to set that up while routing surplus to savings vehicles rather than the spending bucket?

What I've tried so far:

• Bracket top-up entry on the RRSP — unclear whether it's actually firing in gap years where spending is already covered by minimums
• Forced spending buckets paired with matching automatic savings entries into TFSA — this moved money but routed it through spending rather than cleanly repositioning it, which distorts the plan's accuracy
• Fixed dollar withdrawal entries — workable but requires manually estimating the right amount rather than letting MR optimize dynamically

1. Does the bracket top-up entry actually force withdrawals when there's no spending deficit, or does it only fire when cash is needed?
   It will force a withdrawal to the top of the tax bracket, whether needed for spending or not. Note that it may not make additional withdrawals if the account has already been converted to an RRIF and the Required Minimum withdrawal has already brought you up to the top of the tax bracket before that minimum withdrawal.
2. If you want to force more then you  can set up an Automatic Withdrawal of the RRSP for a specific amount.
   
   You can also set up automatic savings to the TFSA to make sure it's funded. Not sure what you mean by forced spending buckets.
   
   If the account withdrawals are not needed for spending or savings, then you'll have a surplus after all is done, and your Deposit Priorities will determine which accounts the surplus goes to, probably TFSA, then Non-registered if TFSA maxed out. The Spending priority limit should be 0 so that there's no extra spending.
   
   The best way to optimize your strategy after retirement is to run the Withdrawal Optimizer to see if and how it comes up with a better strategy.
   
   To optimize the RRSP withdrawals specifically for yourself without knowing the exact amount, you can run a SCAN on the Automatic Withdrawal amount and see what does best.
   
   Several things come into play with RRSP melting. You have the differential tax brackets, and people get that it's better to make withdrawals when in a lower tax bracket. What is harder to grasp is that such prepayment of taxes can be costly, as that money that could have been invested and grown tax-free is gone early. So it's not just tax rates to consider, it's also growth rates and time.  Thankfully, the TIME MACHINE and Withdrawal Optimizer are good at these calculations!