RRIFs

RRIFs

A Registered Retirement Income Fund (RRIF) is a registered account designed to give you income flow in retirement. Think of a RRIF as a Registered Retirement Savings Plan (RRSP) in reverse – RRSPs allow you to accumulate tax-sheltered savings for retirement, while your RRIF generates a taxable retirement income stream from these savings – which still continue to grow and remain tax-sheltered.

Did you know?

  • An RRSP can be rolled into a RRIF at any time, but you are not required to do so until the end of the year in which you turn 71 years of age; at which time, the RRSP matures and must be converted to either a life annuity or a RRIF, or deregistered.
  • Life Income Funds (LIFs), Locked-in Retirement Income Funds (LRIFs) and Prescribed RIFs (PRIFs) are locked-in versions of Registered Retirement Income Funds (RRIFs). They are designed to generate retirement income from monies transferred from a pension plan, LIRA, or locked-in RRSP.
  • To convert an RRSP to a RRIF, a RRIF account needs to be set up first and then assets from the RRSP can be transferred over ‘in kind’ without incurring a taxable transaction.
  • An RRSP contribution can be made until December 31 in the year that you turn 71 years of age.
  • When you die, your RRIF can be taken over by your surviving spouse without interrupting payments, if named as your successor annuitant. Alternatively, your RRIF can be transferred to your surviving spouse tax-free, if named as your beneficiary. In either case, the value of your RRIF will not be included in your estate when calculating probate fees.

RRIF Benefits

  • Consistency – Your RRIF can deliver a continuous stream of income during retirement
  • Personalized – You choose how the money within the RRIF is invested
  • Efficient – Investments can continue to grow on a tax-free basis within the plan
  • Seamless – Income tax on the amount transferred from your RRSP is deferred until a withdrawal is made from your RRIF
  • Minimum Withdrawals
    • Each year (beginning the year after the RRIF was opened), a taxable “annual minimum amount” must be withdrawn from your RRIF. The minimum withdrawal is based on a set formula that takes into consideration your age (or your spouse’s age*) and the market value of the account on January 1 of the withdrawal year.

      You may start receiving withdrawals from the RRIF as soon as the account is set up, but the annual minimum payment must be taken by December 31 of the year following the one in which the RRIF was established and then each year thereafter. For example, if the RRIF is opened in August 2017, the first withdrawal must occur by December 31, 2018.

      AGE (At the beginning of the calendar year) Required Minimum Payment (as a % of the market value as of Dec 31 of the previous calendar year
      < 71 Formula is 1/(90 - age)
      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%

      Unlike the locked-in versions, a RRIF has no maximum limit on withdrawals in any given year, however any amounts withdrawn over and above your annual minimum amount will have taxes withheld at the prescribed rate. While withholding taxes are not applied to the RRIF minimum amount, the total gross amount withdrawn is added to your annual income and will be taxed accordingly based on your marginal tax rate.

      *You can use your spouse's age to calculate the annual minimum amount. The decision to use the spouse's age must be made before the first withdrawal is received and cannot be revoked afterwards.

  • Taxes on RRIF
    • All RRIF withdrawals are considered income and must be reported on your personal tax return. A T4RIF tax slip (along with a Relevé 2 for Quebec residents) is issued annually for income tax filing purposes.

      Withholding tax – if the RRIF payment is more than the minimum amount

      • The withholding tax is applied to any portion of the RRIF that is in excess of the minimum amount
      • For periodic payments, the minimum is pro-rated in equal proportions for the given year.
      • The withholding tax rate that is applied depends on the amount requested to be withdrawn and whether you reside in Quebec

      Amount withdrawn above the minimum amount Non-Quebec Residents Quebec Residents
      Federal Withholding Tax Federal Withholding Tax Provincial Withholding Tax Total
      $5,000 or less 10% 5% 15% 20%
      $5,001 - $15,000 20% 10% 15% 25%
      $15,001 or more 30% 15% 15% 30%