FAQ – Accounts and services – RRIF

If you have an RRSP, you’ll need to transfer the funds to a RRIF by the end of the calendar year in which you turn 71. If you don’t, your RRSP’s total value will be taxed and your RRSP will no longer be considered a registered plan.

You cannot make any contributions to a RRIF. Only transfers from your RRSPs or from another RRIF are accepted.

There’s no minimum age to open a RRIF; you can open one when you want to withdraw funds for retirement. However, as long as you have a balance in your RRIF, you’ll be required to withdraw the minimum amount set each year until the fund has been depleted.

It’s important to note that there’s no minimum withdrawal amount for the year in which you set up your RRIF. For the subsequent years, even if you don’t need money from your RRIF, you’re required to withdraw the minimum amounts in accordance with government regulations. However, you could deposit the money you don’t need from your RRIF into a tax-free savings account (TFSA) if you have contribution room left, or into a registered education savings plan (RESP) for your grandchildren (your beneficiaries).

The value of all the assets held in your RRIF on the date of your death becomes taxable income, except if all or part of this amount has been allocated to and included in the income of your legal spouse or common-law partner, or your minor or disabled children and grandchildren who are financially dependent on you at the time of your death. They can then make a direct or indirect transfer of the amount in your RRIF to their RRSP or RRIF, or they can use the money to purchase an annuity. You can transfer up to $200,000 from your RRIF to a registered disability savings plan (RDSP) of a child or grandchild with a disability who is financially dependent on you.

No, you’re not required to open more than one RRIF. Ideally, we recommend that you group everything at one financial institution when you convert your RRSP into a RRIF to make it easier to manage your retirement income. You’ll also be able to select different types of investments to diversify your RRIF portfolio and to better plan your withdrawals.

No, you cannot transfer a LIRA to a RRIF. LIRAs and locked-in RRSPs have to be transferred to a life income fund (LIF).

All withdrawals you make from a RRIF are taxable and are added to your annual income. If you withdraw more than the minimum amount, the financial institution is required to charge a withholding tax on the excess amount. When you file your taxes, you’ll need to compare the taxes owing to the total of the amounts withheld at source to determine the amount of tax you owe or the amount of your tax refund. For more details, you can read this article.

The purpose of a RRIF is to provide a retirement income, just like a pension income from your employer. When you turn 65, all RRIF withdrawals are eligible for the pension income tax credit. RRSP withdrawals—except for a life annuity—are not considered to be retirement income. Therefore, RRSP withdrawals are not eligible for the pension income tax credit. That’s why when you turn 65, it’s often better to convert all or a portion of your RRSP or RRIF to get tax savings of $2,000 on your retirement income.