RRIFs

A Registered Retirement Income Fund (RRIF) is a tax-advantaged Canadian investment account designed to provide retirement income. It holds investments that can continue to grow tax-deferred while you withdraw funds to live on. RRIFs are funded by converting funds from an RRSP or other registered plans, and they can also receive transfers from RRSPs, pension plans, or other registered vehicles.

A key eligibility and timing rule is that you must convert your RRSP or other registered plan into a RRIF by December 31 of the year you turn 71. Once established, a RRIF cannot accept new contributions; its purpose is to distribute retirement income from the funds already inside the plan rather than to accumulate additional contributions.

Investments within a RRIF can include a wide range of eligible assets, such as GICs, mutual funds, stocks, bonds, and ETFs. The account owner retains control over the investment mix, subject to the plan’s rules and the insurer or fund manager.

Withdrawals are mandatory and are limited to a minimum amount each year, calculated using a government schedule based on age. There is no maximum withdrawal, but larger withdrawals reduce the fund’s principal and future growth. Withdrawals are included in the recipient’s taxable income for the year, potentially affecting marginal tax rates. Some institutions may withhold tax on withdrawals.

Beneficiary and death rules allow for a spousal rollover in certain cases, enabling a tax-deferred transfer to a new RRIF or annuity. If there is no eligible spouse, the remaining balance may be paid to the designated beneficiaries and taxed in the year of death.

RRIFs are a fundamental vehicle for converting accumulated retirement savings into a steady income stream while maintaining investment flexibility and tax efficiency.