What Is A RRIF?

An RRIF, which stands for Registered Retirement Income Fund, is an extension of your RRSP. It's simply a continuation of your RRSP, but with a twist: you can't make regular contributions to an RRIF - only withdrawals. That's because the main purpose of an RRIF is to provide a source of ongoing retirement income. There are no limits on withdrawals and the balance of your savings can continue to grow tax-free (until withdrawn).

How Does A RRIF Work?

RRSPs have a limited shelf life and must be wound up by the end of the year in which you reach age 71. A RRIF is one of the most flexible and tax-effective ways of generating income in retirement as you phase-out of the workplace or retire.

• Convert your RRSP to a RRIF by the end of the year you turn 71—or sooner if you need the income. Your investments transfer directly and do not have to mature or be liquidated.

• Start taking withdrawals the year after you open your RRIF. This can be any amount, as long as you meet the minimum annual withdrawal as set out by federal regulations.

• Report withdrawals as income on your tax returns. RRIF funds are taxable in the year you withdraw them.

Benefits of a RRIF

• Defer Tax On Income Like an RRSP, you can hold and grow a variety of investments such as a GIC, mutual funds, bonds, and equities tax‑sheltered in a RRIF.

• Control Your Income As long as you take the required minimum amount, decide when and how much to withdraw. Option to convert to an annuity later.

• Transfer Assets Tax Free RRIFs let your spouse inherit your retirement savings tax‑free, easing some of the financial pressure your absence may cause.