5 reasons to open a RRIF

A Registered Retirement Income Fund (RRIF) is a registered account that gives you a steady income in retirement. You open a RRIF by transferring money from your RRSP. Your savings remain sheltered from tax until the money is withdrawn.

1. Savings grow tax free

You won’t pay any taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition on investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition earningsEarnings For companies, it’s the money they make and share with their shareholders. For investors, it’s the money they make from their investments.+ read full definition when you convert your RRSPRRSP See Registered Retirement Savings Plan.+ read full definition to a RRIFRRIF See Registered Retirement Income Fund.+ read full definition. Your money will continue to grow tax free as long as it stays in the RRIF. You only pay tax on the withdrawals you make. Learn more about how RRIFs work.

2. Variety of investment options

You decide how to investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition your money. A RRIF can hold the same kinds of investments as an RRSP, including GICs, mutual funds, ETFs, segregated funds, stocks and bonds.

3. Flexible withdrawal options

While there is a minimum amount you have to take out every year, there is no maximum amount. You can:

  • choose to make regular monthly, quarterly, semi-annual or annual withdrawals,
  • change the amount and frequency of your withdrawals if your needs change, and
  • take lump-sum withdrawals if you need extra cash.

You can decide how much money to withdraw from your RRIF each year — as long as you meet the minimum withdrawalMinimum withdrawal The smallest sum that you can take out of an account or investment at one time.+ read full definition requirement.

4. Minimum amounts can be based on spouse’s age

If your spouse is younger than you, you can use their age to calculate the minimum amount you have to take out of your RRIF every year. The lower the age, the lower the minimum amount and the less income taxIncome tax A charge you pay based on your total income from all sources. The Canadian government and your province set the rate.+ read full definition you’ll pay on the withdrawals. This is a good strategy if you have other sources of income and want to leave your money in your RRIF for as long as possible.

5. Spouse can inherit RRIF tax free

If you name your spouse as your beneficiary, they can inherit your RRIF tax free. It won’t be included in your final income tax return. If you name your spouse as “successor annuitantSuccessor annuitant A spouse or common-law partner who you name as the sole beneficiary of your RRSP or RRIF. The plan will pass to your surviving spouse, and payments may continue without any break. You can only name your spouse or partner as your successor annuitant.+ read full definition”, they can take over your RRIF and automatically start receiving payments from it after your death. The value of your RRIF will also not be included in your estateEstate The total sum of money and property you leave behind when you die.+ read full definition for calculating probate fees.

3 key points

  1. Tax-freeTax-free Money that you do not pay tax on.+ read full definition savings
  2. Variety of investment optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition
  3. Flexible withdrawals
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