Registered Retirement Income Fund – RRIF
A RRIF is a Registered Retirement Income Fund. Your RRSP can be transferred tax-free to a RRIF to establish a source of retirement income.
EVERYTHING YOU NEED TO KNOW
- While you cannot have an RRSP after the end of the year you turn 71, you don’t need to wait until age 71 to set up a RRIF, as you can move some or all your funds at any time.
- Unlike an RRSP, you must withdraw a minimum amount annually from a RRIF. The minimum is set by the federal government, and depends on your age and RRIF balance at the start of the year. Minimum payments from a RRIF must start in the calendar year after it was first funded. You can also take more than the minimum. As long as your plan is not “locked in” (because it originally came from a pension plan), there is no maximum withdrawal from your RRIF.
- You may base your RRIF’s minimum payments on your spouse’s age rather than yours. You must decide when opening your RRIF. Electing your spouse’s age for your payments has several possible benefits:
- If your spouse* is younger, your minimum payment will be lower (much lower if they’re under age 71) – this lets you keep more in your RRIF and defer more tax, longer.
- If you want to withdraw more than the minimum required for your age, you can base your payments on your older spouse’s age and pay less withholding tax on withdrawals
- If both you and your spouse’s RRIFs are based on the same birth date, they can be combined into one plan if one of you passes away.
- Forgot to use your spouse’s age when opening your RRIF? (Or have you married or begun a common-law relationship since opening your RRIF?) You can transfer at any time into a new RRIF based on a spouse’s age.
*Spouse includes a common-law or same-sex partner.
WHAT’S IN IT FOR YOU?
- RRIFs can keep estate planning simple. You can name your spouse or partner as your RRIF’s “successor annuitant” so that, upon your passing, they can continue taking income from your RRIF.
- Alternatively, they can transfer your RRIF to their own RRSP or RRIF, without immediate tax. If you don’t have a spouse, or prefer to name another beneficiary, the remaining balance can be paid to your estate or beneficiary (usually the balance will be taxable on your final tax return).
- RRIF income is taxable, but the amount of tax payable should be minimal as you will no longer be earning employment income. You control the investment of your RRIF funds by determining which options are best for you. You also control your payment schedule which allows you to meet your personal income needs upon retirement.
- As there are a variety of investment options to choose from, it is important to seek advice from your LVCU retirement specialist in order to ensure all of your future needs are met so you can enjoy your retirement with ease.