Outline a typical retirement withdrawal sequencing strategy.

• A. Draw first from taxable accounts, then tax-deferred accounts (RRIF), then tax-free accounts (TFSA) as needed.
• B. Draw first from TFSA, then RRSP, then RRIF as needed.
• C. Draw first from RRSP, then TFSA, then RRIF.
• D. Draw first from RRIF, then TFSA, then RRSP.

Answer: (A)

The main idea here is to maximize tax efficiency across account types during retirement by choosing the withdrawal order that minimizes current and future taxes while preserving flexibility.

Starting with taxable accounts allows you to use funds where taxes are already incurred or where gains can be managed and harvested strategically, meeting cash needs with a tax-efficient footprint. This keeps the more heavily taxed or potentially more irksome tax situations in check for as long as possible.

Next, tapping the tax-deferred space (RRSP/RRIF) means you’re taking income that will be taxed as ordinary income in the year you withdraw. Delaying these withdrawals helps keep current tax drag lower early in retirement and avoids bumping up taxable income too soon, while you still have other sources to draw from.

Finally, using the tax-free account (TFSA) last preserves a reservoir of tax-free money for years when income is higher or other factors would make taxes rise if you pulled from taxable or RRIF funds. TFSA withdrawals don’t affect taxable income and don’t trigger tax on the withdrawal itself, and you regain contribution room in future years, which adds flexibility.

In short, this order prioritizes reducing taxes now and preserving future tax-free options, making it the most tax-efficient strategy over a retirement horizon.