AVC Income Option

In response to requests from members, we've introduced an option to keep non-locked-in funds in your AVC account beyond the year in which you turn age 71. We call this new part of the AVC program the "AVC Income Option."

The AVC Income Option brings three important changes to AVCs:

  • You are no longer required to transfer non-locked-in funds out of your AVC account by the end of the year in which you turn age 71. Any non-locked-in funds that you have in your AVC account on December 31st of the year you turn age 71 will remain in your AVC account, and your participation in OMERS AVCs will continue.
  • You must withdraw a minimum amount each year starting with the year you turn age 72. This withdrawal, which we call the "income amount," is required under the Income Tax Act and must be paid in cash.
  • Optional withdrawals during the withdrawal window must be made in cash after the year you turn age 71. Fund transfers to another savings arrangement are no longer available.

Aside from these changes, the same features of OMERS AVCs continue to apply, such as the application of the OMERS Fund rate of return and the ability to make optional withdrawals during the withdrawal window.

Special notice to AVC members with non-locked-in AVCs turning age 71 in 2016

If you turn 71 in 2016, and you currently have non-locked-in funds in your AVC account, you will receive a package from OMERS before the end of September 2016. The package will include information about the AVC Income Option, your options and customized forms.

Note: If you only have locked-in funds, you will not receive this package.

The AVC Income Option is Easy and Seamless

If you have non-locked-in funds in your AVC account on December 31st of the year you turn age 71, the funds will remain in your AVC account and your participation in OMERS AVCs will continue. With the AVC Income Option, you can keep funds in your AVC account for your lifetime, provided you withdraw at least the minimum each year.

Annual Minimum Withdrawal (Income Amount)

Each year after you turn age 71, you must withdraw at least the income amount from your AVC account.

The income amount starts at around 5% of your AVC account balance at age 72, and peaks at 20% at age 95 and beyond. The age-based percentage is applied to the balance of your AVC account at the start of the year. The income amount is calculated using the formula set out in the Income Tax Act, and will be shown on your AVC Annual Statement, which is mailed to you at the end of February each year.

Chart showing income amount by age (+)

Income amount (by age)


Your age on January 1

% of your AVC account that must be withdrawn in that year

71

5.28

72

5.40

73

5.53

74

5.67

75

5.82

76

5.98

77

6.17

78

6.36

79

6.58

80

6.82

81

7.08

82

7.38

83

7.71

84

8.08

85

8.51

86

8.99

87

9.55

88

10.21

89

10.99

90

11.92

91

13.06

92

14.49

93

16.34

94

18.79

95 or older

20.00

How the Income Amount Works


If, during the annual March 1 to April 30 AVC withdrawal window, you:

 

Then:

Do not make an optional withdrawal from your AVC account.

OMERS will automatically withdraw the greater of your income amount or the $500 minimum and pay it to you in June.

Make an optional withdrawal from your AVC account that is less than the income amount.

OMERS will automatically withdraw the difference between the two amounts from your AVC account and pay it to you in June.

Make an optional withdrawal from your AVC account that is equal to or greater than the income amount.

OMERS will take no further action – an additional withdrawal is not required.

Tax will be withheld from all withdrawals beginning the year you turn age 72.

Income amount examples (+)

Example 1: Amanda is 72 years old on January 1 and her AVC account balance is $40,000. The income amount on her AVC Annual Statement is $2,160 (5.40% of $40,000).


If, during the annual March 1 to April 30 AVC withdrawal window:

Then:

Amanda does not make an optional withdrawal from her AVC account.

OMERS will automatically withdraw $2,160 from Amanda’s account and pay it to her in June.

Amanda makes an optional withdrawal of $1,000 from her AVC account.

OMERS will automatically withdraw the difference of $1,160 ($2,160 minus $1,000) from Amanda’s account and pay it to her in June.

Amanda makes an optional withdrawal of $2,160 or more.

OMERS will take no further action – an additional withdrawal is not required.

Example 2
Jonas is 72 years old on January 1 and his AVC account balance is $8,000. The income amount on his AVC Annual Statement is $432 (5.40% of $8,000). Note: The income amount is less than the $500 minimum.


If, during the annual March 1 to April 30 AVC withdrawal window:

Then:

Jonas does not make an optional withdrawal from his AVC account.

OMERS will automatically withdraw $500 from Jonas’ account and pay it to him in June.

Jonas makes an optional withdrawal Note: He would have to withdraw at least the $500 minimum.

OMERS will take no further action – an additional withdrawal is not required.

Receive Your Withdrawals Quickly and Conveniently with Direct Deposit

Direct deposit is fast, easy and convenient. When the income amount is paid from your AVC account or you make an optional withdrawal, your money will be deposited directly into your bank account. There's no waiting – your cheque will never be delayed or lost in the mail.

The AVC Income Option Direct Deposit Form to set up direct deposit will be available before the next window opens on March 1, 2017. Please visit again.

How to Withdraw Funds (beginning the year you turn 72)
To make an optional withdrawal during the annual March 1 to April 30 withdrawal window, you will need to use the paper form. You will not be able to initiate your withdrawal using myOMERS.

The AVC Income Option withdrawal form will be available before the next window opens on March 1, 2017. Please visit again.

 AVC Guide

Tip

OMERS will automatically withdraw the income amount, which is the minimum you must withdraw each year, and pay it to you in June if you don’t make a withdrawal – you don’t have to do anything.