A Registered Retirement Income Fund (RRIF) is an investment account that allows a Registered Retirement Saving Plan (RRSP) to continue past maturity and is established to draw income for those nearing or living in retirement.
A RRIF may be opened at any age, but must be opened before December 31 in the year you turn 71. A RRIF is funded by a RRSP or Spousal RRSP, or in certain situations, from another registered plan.
Money in your RRIF may be invested in a variety of investment options, including stocks, bonds, GICs, Mutual Funds, ETFs, Managed Portfolios, and more.
The benefits of a RRIF:
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- Tax deferred growth – investments in a RRIF grow tax-deferred until withdrawal.
- No limit on withdrawals – you may withdraw as much money as you want from your RRIF, whenever you want.
- Withholding tax is limited – although all withdrawals are taxable, tax is only withheld from a RRIF withdrawal when the amount withdrawn is above the minimum required.
- Tax-deferred transfer on death – upon death, the assets in your RRIF can be transferred to your spouse or common-law partner’s RRSP or RRIF on a tax-deferred basis if they are the named beneficiary.
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There is no limit on withdrawals, so you may withdraw any amount at any time. However, minimum payments must begin no later than December 31 in the year after you establish your RRIF. Each year the minimum amount you are required to withdraw is calculated by the federal government, based on your age and the value of your account as of December 31 of the previous year.
You are required to pay income tax on all RRIF withdrawals at your marginal tax rate. There are no taxes withheld on the minimum amount, but, both unscheduled payments and payments above the minimum are subject to withholding tax. You may request that more tax be withheld on withdrawals, even when it is not mandatory.
Upon death, your RRIF can be transferred to your spouse or common-law partner on a tax-deferred basis, as long as they are the named beneficiary on your RRIF and they transfer the assets from your RRIF to their own RRSP or RRIF.
