Registered Retirement Income Funds

A registered retirement income fund (RRIF) is like a registered retirement savings plan (RRSP) in reverse.

Contributions made to your RRSP throughout your working years grow on a tax-deferred basis.

When you need to begin receiving income or at the latest by the end of the year you turn 71, you must convert your RRSP to a RRIF. A RRIF is designed to provide you with income while keeping the assets retained in your RRIF tax-deferred.

You can transfer your RRSP into a RRIF and enjoy the same flexibility and choice you had in your RRSP, with the added benefit of being able to withdraw a retirement income that’s tailored to meet your needs.

Withdrawing from a RRIF

You can choose to receive a level stream of payments or only the minimum payment, with scheduled larger lump-sum payments to meet specific needs such as travel or a special purchase. You can also elect to have your income increase regularly to combat inflation. Payments will be taxed as income in the year they are received.

There’s no maximum withdrawal limit, but the government legislates a minimum annual withdrawal that may be paid monthly, quarterly, semi-annually or annually. The minimum withdrawal ensures you’ll receive an increasing percentage from the account each year until you reach age 94 when the withdrawal is a straight 20% of the policy balance.

Before age 71, the minimum payment is calculated to be the value of your RRIF at the start of the year divided by the difference between 90 and your age at the start of the year.

For example, if the value of your RRIF is $750,000 and you are 65 years of age, the minimum payment would be $30,500 ($750,000/(90-65).

After age 71, your minimum RRIF payment is based on a factor provided by the Federal Government.

A RRIF also allows you to calculate the minimum payout based on your spouse’s age. This option must be decided upon when the RRIF is set up.