Registered Retirement Income Funds (RRIFs) — What You Need to Know

As you approach retirement, understanding how to turn your Registered Retirement Savings Plan (RRSP) into a reliable income stream is essential. One of the most common ways to do this in Canada is by converting your RRSP into a Registered Retirement Income Fund (RRIF).

What Is a Registered Retirement Income Fund (RRIF)?

A RRIF is a retirement account designed to provide you with regular income payments after you stop contributing to your RRSP. Think of it as a flexible way to draw income throughout your retirement years.

When you convert your RRSP into a RRIF (which must happen by the end of the year you turn 71), you can no longer contribute to that RRSP, but your investments will continue to grow tax-deferred inside the RRIF. The government requires you to withdraw a minimum amount each year, based on your age.

How Does a RRIF Work?

• You open a RRIF through a financial institution such as a bank, credit union, trust company, or insurance provider.
• You transfer your RRSP savings into the RRIF.
• You start withdrawing funds annually—subject to minimum withdrawal rules set by the government.
• Withdrawals are taxed as income in the year you receive them.

You don’t have to start withdrawals until the year you turn 72, but once you begin, the minimum amount you must withdraw increases as you age.

Benefits of a RRIF

• Flexibility: You choose how much over the minimum to withdraw, helping you manage your income and tax planning.
• Growth Potential: Your investments continue to grow tax-deferred until withdrawal.
• Income Stream: Provides a reliable way to turn savings into retirement income.
• Estate Planning: RRIFs can be structured to pass remaining funds to beneficiaries efficiently.

Tax Implications and Withdrawal Strategies

Withdrawals from your RRIF are taxable as income. Planning your withdrawals carefully can help reduce tax burdens, especially if you can supplement with other tax-advantaged accounts like a Tax-Free Savings Account (TFSA).

Transferring and Converting to a RRIF

You can transfer assets not only from your own RRSP but also from a spouse’s RRSP (if applicable) into a RRIF. Importantly, you do not have to liquidate your RRIF in one lump sum — you control how much you withdraw each year, within government minimums.