How RRIFs work

A brief look at one of the most flexible and tax-effective ways of generating income in retirement.

A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that gives you a steady income in retirement. Before, you were putting money into your RRSP to accumulate savings for retirement. Now, you withdraw that money from your RRIF as retirement income.

6 things to know about RRIFs

  1. You can open a RRIF anytime, but no later than the end of the year you turn 71.
  2. You open a RRIF by transferring money from your RRSP. Transfers from other registered plans like pension plans and DPSPs are allowed under certain circumstances.
  3. Once the RRIF is set up, you can’t make any more contributions to the plan. However, you can have more than one RRIFRRIF See Registered Retirement Income Fund.+ read full definition.
  4. You choose the types of investments to hold in a RRIF. Examples: GICs, mutual funds, ETFs, segregated funds, stocks and bonds.
  5. You must take out a minimum amount from your RRIF each year. This amount increases as you get older. There is no maximum withdrawal limit.
  6. If any money is left in your RRIF when you die, it will go to your named beneficiaries or to your estate.

Learn more about how RRIFs work.

You must take out a minimum amount from your RRIF each year. But there is no maximum withdrawal limit.

3 tax considerations

  1. You don’t pay 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 the money in your RRIF, as long as it stays in the plan. This includes any money you make from investing.
  2. You pay tax on the money that you withdraw from your RRIF.
  3. If you take out more than the minimum amount, you’ll also pay withholding tax.
Pension income amount

If you’re over age 65 and don’t have a company pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition plan, withdrawals from your RRIF may qualify for the pension income amount.

Where to open a RRIF

  • Banks and trustTrust An account set up to hold assets for a beneficiary. A trustee manages the assets until the beneficiary reaches legal age.+ read full definition companies
  • Credit unions and caisses populaires
  • Insurance companies
  • Mutual fundMutual fund An investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. A professional manager chooses investments that match the fund’s goals for risk and return. You can redeem your fund units at any time.+ read full definition companies
  • InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition firms
CreditorCreditor A person or institution that lends money. To borrow from a bank or finance company, you must sign a legal contract that gives them the right to claim your car, home or other assets if you don’t pay back the loan.+ read full definition protection

RRIF funds are largely protected from creditors if you go bankrupt. But if you open your RRIF in the 12 months before you declare bankruptcy, it can be seized by creditors.

Key point

You must take out a minimum amount from your RRIF each year. But there is no maximum withdrawal limit.

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