What is a RRIF?
A Registered Retirement Income Fund (RRIF) is a tax-deferred retirement income vehicle available to Canadians. It is essentially the natural evolution of your Registered Retirement Savings Plan (RRSP). While an RRSP is designed to help you save for retirement, a RRIF is designed to provide income during retirement.
For official information, visit the Canada Revenue Agency’s RRIF page.
RRSP to RRIF Conversion
By December 31 of the year you turn 71, you must convert your RRSP into a retirement income option. A RRIF is the most popular choice because it offers flexibility and continued tax-deferred growth. Other options include purchasing an annuity or taking a lump-sum withdrawal (generally not recommended due to tax implications).
You can convert your RRSP to a RRIF earlier than age 71 if you wish to start receiving retirement income sooner. For detailed information on conversion rules, see the Financial Consumer Agency of Canada’s retirement income options guide.
How a RRIF Works
When you convert your RRSP to a RRIF:
- Your investments remain tax-sheltered – The investments in your RRIF continue to grow tax-free until withdrawn
- You must make minimum withdrawals – Unlike an RRSP, you are required to withdraw a minimum amount each year
- You maintain investment control – You decide how your RRIF assets are invested
- No more contributions – You cannot make contributions to a RRIF as you could with an RRSP
RRIF Minimum Withdrawal Rates (2024)
The government sets minimum annual withdrawal amounts based on your age (or your spouse’s age, if younger). Here are the minimum withdrawal percentages:
| Age at Beginning of Year | Percentage of RRIF Value |
|---|---|
| 55-70 | 1 ÷ (90 – age) |
| 71 | 5.40% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.53% |
| 75 | 5.67% |
| 76 | 5.67% |
| 77 | 5.67% |
| 78 | 5.82% |
| 79 | 5.82% |
| 80 | 5.98% |
| 85 | 7.71% |
| 90 | 11.92% |
| 95+ | 20.00% |
For a complete table of RRIF minimum withdrawal rates, visit the Canada Revenue Agency website. These rates are prescribed in the Income Tax Regulations, section 7308.
Types of RRIFs
There are several types of RRIFs available:
- Regular RRIF – The standard RRIF for individual RRSP conversions
- Spousal RRIF – Created from a Spousal RRSP
- Self-Directed RRIF – Gives you complete control over investment decisions
- Locked-In RRIF (LRIF) – Created from locked-in retirement accounts or pension transfers
- Life Income Fund (LIF) – A type of RRIF specifically for locked-in pension funds
RRIF Benefits
1. Tax-Deferred Growth
Investments within your RRIF continue to grow tax-free until withdrawn, allowing for continued compound growth during retirement.
2. Income Flexibility
While there are minimum withdrawal requirements, you can withdraw more than the minimum if needed, giving you flexibility in managing your retirement income.
3. Investment Control
You maintain control over how your RRIF assets are invested, allowing you to adjust your investment strategy throughout retirement.
4. Estate Planning Benefits
A RRIF can be transferred tax-free to a spouse or financially dependent child/grandchild upon death. For other beneficiaries, the remaining RRIF value is taxable but can be paid directly to beneficiaries, bypassing probate.
5. Income Splitting
After age 65, you can split up to 50% of your RRIF income with your spouse, potentially reducing your overall tax burden.
RRIF Taxation
Withdrawals
All RRIF withdrawals are considered taxable income in the year they are received. Withholding taxes are applied to amounts above the annual minimum withdrawal:
- 10% (5% in Quebec) on amounts up to $5,000
- 20% (10% in Quebec) on amounts between $5,001 and $15,000
- 30% (15% in Quebec) on amounts over $15,000
Note: No withholding tax is applied to the minimum required withdrawal amount.
For detailed information on RRIF tax implications, see the CRA’s guide on RRIFs and taxation. Non-residents should review the CRA’s information for non-residents receiving RRIF payments.
Death of a RRIF Holder
When a RRIF holder dies, the RRIF can be:
- Transferred to a spouse or common-law partner tax-free
- Transferred to a financially dependent child or grandchild (can be tax-free in certain circumstances)
- Paid to other beneficiaries (fully taxable in the deceased’s final tax return)
RRIF Investment Options
You can hold various investments in your RRIF, including:
- Guaranteed Investment Certificates (GICs)
- Mutual funds
- Exchange-traded funds (ETFs)
- Stocks
- Bonds
- Cash and money market funds
- Income trusts
- Segregated funds
Your investment choices should align with your retirement goals, income needs, and risk tolerance.
RRIF vs. Annuity
When converting your RRSP, you have the option of choosing a RRIF or an annuity:
| RRIF | Annuity |
|---|---|
| Flexible withdrawal amounts (above minimum) | Fixed payments for life or specified period |
| Control over investments | No investment decisions required |
| Potential for continued growth | No potential for growth beyond fixed payments |
| Estate value can increase or decrease | Limited or no estate value (depending on option) |
| Requires ongoing management | No management required |
The Canadian Life and Health Insurance Association provides detailed information about annuities on their consumer information website. The Office of the Superintendent of Financial Institutions (OSFI) regulates the insurance companies that offer annuities. Visit OSFI’s website for information on their regulatory oversight.
RRIF Strategies for Maximizing Retirement Income
1. Use the Younger Spouse’s Age
If you have a younger spouse, you can use their age to calculate your RRIF minimum withdrawals, resulting in lower required withdrawals and extended tax-deferred growth.
2. Time Your RRSP to RRIF Conversion
Consider converting a portion of your RRSP to a RRIF at age 65 to take advantage of the pension income tax credit, which applies to RRIF income after age 65.
3. Strategic Withdrawal Sequencing
Plan the order of withdrawals from various retirement accounts (RRIF, TFSA, non-registered accounts) to minimize taxes and maximize government benefits.
4. Split RRIF Income
After age 65, split up to 50% of your RRIF income with your spouse to reduce your family’s overall tax burden.
5. Make Your First RRIF Withdrawal Early in the Year
Consider making your annual RRIF withdrawal early in the year to maximize tax-deferred growth on investments remaining in your RRIF.
Setting Up a RRIF
You can set up a RRIF through:
- Banks
- Credit unions
- Trust companies
- Insurance companies
- Investment firms
- Robo-advisors
The process typically involves:
- Completing a RRIF application
- Providing instructions for transferring RRSP funds
- Selecting investments for your RRIF
- Setting up your withdrawal schedule
- Designating beneficiaries
For guidance on selecting financial institutions and understanding your rights, consult the Financial Consumer Agency of Canada and review their Banking Rights and Responsibilities resources.
Common RRIF Questions
Can I Have Multiple RRIFs?
Yes, you can have multiple RRIFs with different financial institutions. Each RRIF will have its own minimum withdrawal requirement.
Can I Convert My RRIF Back to an RRSP?
No, once you convert an RRSP to a RRIF, you cannot convert it back.
Can I Withdraw More Than the Minimum Amount?
Yes, you can withdraw as much as you want from your RRIF, but amounts above the minimum are subject to withholding tax.
What Happens If I Don’t Withdraw the Minimum Amount?
If you don’t withdraw the required minimum amount, you may face tax penalties on the shortfall.
Are RRIF Withdrawals Eligible for Income Splitting?
Yes, RRIF withdrawals qualify as eligible pension income for income splitting purposes after age 65.
For answers to additional questions, the Canada Revenue Agency provides a comprehensive FAQ section on RRIFs. You can also contact the CRA directly through their individual tax enquiries line at 1-800-959-8281.
Conclusion
A RRIF is a flexible retirement income vehicle that allows your retirement savings to continue growing tax-deferred while providing you with regular income. By understanding RRIF rules and implementing strategic withdrawal plans, you can maximize your retirement income while minimizing taxes.
Consider consulting with a financial advisor to develop a RRIF strategy tailored to your specific retirement needs and goals.
Tax Depot provides these tax guides for informational purposes only. While we strive to maintain current information, tax policies change frequently. This does not constitute tax advice. For guidance on your specific situation, please consult with our tax professionals.
Last Updated: April 2025