How Does the RRSP Meltdown AI Strategy Work?

The RRSP Meltdown AI Strategy works by targeting specific tax brackets to bring income to a certain level. Here's how it works:

1. Income Level Targeting: The strategy aims to bring taxable income to a certain threshold, typically targeting a lower tax bracket.
2. Maximizing Tax Efficiency: The platform pulls funds from registered accounts to bring taxable income to that threshold, filling up the tax bracket without exceeding it. It only pulls enough to reach the target, factoring in other taxable income, such as pension income, CPP, OAS, and non-registered income.
3. How It Works in Practice: If the individual has lower taxable income early in retirement, the strategy will use RRSP withdrawals to top up the taxable income to fill the targeted tax bracket, maximizing tax efficiency by using lower tax rates during retirement.
4. Considerations for Registered Accounts: The strategy also helps to balance withdrawals between registered accounts (RRSP, TFSA) and non-registered assets to optimize taxes in retirement. However, there are limitations if the individual has a LIF as withdrawals are limited to a set maximum.
5. Benefits: This strategy can be effective depending on your situation. The main benefits can be reduced taxes, increased flexibility and managing government benefit clawbacks.

If you would like to see some case studies focused on the RRSP meltdown strategy, you can watch them HERE.