RRIF

A Registered Retirement Income Fund (RRIF) is a Canadian registered retirement income vehicle used to convert registered retirement savings, typically from an RRSP, into a stream of retirement income. A RRIF holds investments such as stocks, bonds, mutual funds, or GICs, and allows the holder to control income timing and investment choices during retirement.

By December 31 of the year you turn 71, you must convert your RRSP to a RRIF or purchase an annuity. A RRIF cannot accept new contributions, but it can hold funds transferred from an RRSP or other registered plans. You remain the holder of the investments as long as you comply with the plan rules.

The investments inside a RRIF are subject to market risk and fees. You decide how to invest within the plan, subject to the plan’s options, and you retain control over assets, subject to minimum withdrawal requirements.

A RRIF requires minimum withdrawals each year. The minimum percentage is based on your age and is applied to the value at the start of the year; the percentage increases with age. Withdrawals are included in your income for the year and taxed at your marginal rate. You may withdraw more than the minimum, but larger withdrawals increase taxes.

Upon death, the RRIF can be transferred to a successor holder if the beneficiary is a spouse or common-law partner; otherwise, the plan funds are paid to named beneficiaries and are typically treated as a disposition for tax purposes, with any value included in the deceased’s final return.

The RRIF provides flexibility to manage retirement income and tax planning, but it also requires active management and carries investment risk. It is a key component in Canada’s retirement framework following the conversion of RRSP assets.