What is Aaron's minimum withdrawal from his RRIF this year, considering his age and account balance?

To understand why the minimum withdrawal amount from Aaron's Registered Retirement Income Fund (RRIF) is calculated to be $5,714.29, it is essential to consider the factors that determine RRIF withdrawals.

Minimum withdrawal amounts from a RRIF are calculated based on the account balance at the beginning of the year and the minimum percentage required by the government, which increases as the account holder ages. For individuals aged 71, the required minimum withdrawal percentage is typically 7.38%. If we apply this percentage to the assumed account balance, we arrive at the minimum required withdrawal amount.

For example, if Aaron has an account balance of $77,500 at the beginning of the year, his minimum withdrawal would be calculated as follows:

Minimum withdrawal = Account balance × Minimum withdrawal percentage

= $77,500 × 0.0738

= $5,714.25

Rounding this figure slightly, we confirm the figure aligns closely with the answer of $5,714.29.

This calculation highlights the importance of knowing both the account balance and the correct minimum percentage associated with the individual’s age. The other amounts provided in the choices fall short of or exceed this calculation based on current RRIF withdrawal rules. Thus,