My dad got a letter from his bank a couple of years before he turned 71. It was dense, full of terms he didn’t recognize, and basically told him that his RRSP was going to be “converted.” He called me, half confused and half worried, asking if the bank was taking his money.

They weren’t. But nobody had ever told him that RRSPs have an expiry date.

None of this is financial advice. I’m sharing what I’ve learned from helping my family navigate this, but everyone’s tax situation is different. Double-check the specifics with a professional before making decisions.

Your RRSP doesn’t last forever

Most people think of an RRSP as a retirement savings account that just sits there until you need it. And it does, for a while. But the government doesn’t let you keep it indefinitely. By December 31 of the year you turn 71, your RRSP must be closed.

You have three options at that point. You can convert it to a RRIF (Registered Retirement Income Fund). You can use it to buy an annuity. Or you can withdraw the entire balance as a lump sum.

Almost everyone chooses the RRIF. An annuity locks you in with an insurance company, and a lump-sum withdrawal would trigger a massive tax bill in a single year. The RRIF lets you keep your investments growing while drawing income gradually. It’s the closest thing to keeping your RRSP, just with mandatory withdrawals attached.

What a RRIF actually is

A RRIF is essentially the same account as your RRSP, holding the same investments. Nothing gets sold. Nothing gets reshuffled. The money just moves from one registration type to another. If you held a mix of ETFs and GICs in your RRSP, you’ll hold the same mix in your RRIF.

The big difference is the direction of the money. An RRSP is for putting money in. A RRIF is for taking money out. You can no longer contribute to a RRIF. Instead, you’re required to withdraw a minimum amount every year, starting the year after the conversion.

The conversion itself is usually painless. Most brokerages handle it with a form and a phone call. Your investments stay in place. The account just gets a new label.

The minimum withdrawal schedule

This is where it gets real. Every year, the government requires you to withdraw a minimum percentage of your RRIF’s value. The percentage is based on your age at the start of the year, and it goes up every year as you get older.

At 72 (the first full year most people have a RRIF), the minimum is about 5.28%. At 80, it’s about 6.82%. By 90, it’s 11.92%. And by 95 and beyond, it hits 20%.

These aren’t optional. If you don’t withdraw the minimum, your financial institution is required to pay it out to you anyway by the end of the year. You can always take out more than the minimum, but you can never take out less.

The part that catches people off guard: the minimum is calculated on the total value of your RRIF at the start of each year. So if your investments have a great year and your balance grows, your required withdrawal the next year grows too. The percentage climbs while the base potentially grows. By your mid-80s, you might be pulling out more than your investments are earning.

It’s all taxable income

Every dollar that comes out of your RRIF is taxed as regular income. Just like an RRSP withdrawal, there’s no special tax rate, no capital gains treatment. It gets added to whatever other income you have that year (CPP, OAS, pension, part-time work) and taxed at your marginal rate.

This is one of the reasons the TFSA is so valuable in retirement. TFSA withdrawals don’t count as income. They don’t push you into a higher bracket. They don’t trigger OAS clawbacks. If you’re planning ahead, having a healthy TFSA balance alongside your RRIF gives you a tax-free pool to draw from when your RRIF income pushes you close to a threshold.

Your financial institution will withhold tax on any RRIF withdrawal above the minimum. For the minimum amount itself, there’s no automatic withholding (except in Quebec). That can catch people off guard at tax time if they haven’t set aside enough.

The younger spouse strategy

Here’s a detail worth knowing. When you set up your RRIF, you can choose to base the minimum withdrawal on your spouse’s age instead of your own, as long as your spouse is younger. You make this election once, at the time of conversion, and it’s permanent.

Why would you do this? Because a younger age means a lower minimum percentage. If you’re 72 but your spouse is 67, your required withdrawal drops. That means less forced income, less tax, and more of your portfolio stays invested and growing.

This works well in households where one partner has a spousal RRSP or where the income split between partners is uneven. It’s one of those small decisions at setup that compounds into real savings over decades of withdrawals.

What if you don’t need the money?

This is the frustrating part for retirees who have enough other income and don’t actually need their RRIF withdrawals to live on. The minimums are mandatory regardless. You have to take the money out, and you have to pay tax on it.

But you’re not required to spend it. A common strategy is to withdraw the minimum, pay the tax, and reinvest whatever you don’t need into your TFSA (if you have room) or a non-registered account. It’s an extra step, and you lose the tax-sheltered growth on that portion, but it keeps the money working.

Some people also consider drawing down their RRSP before 71, voluntarily taking larger withdrawals in lower-income years to reduce the balance before the RRIF minimums kick in. This can make sense if you retire early and have a gap between your last paycheque and when CPP and OAS start. Those low-income years are a window to pull RRSP money out at a lower tax rate. It takes planning, though, and the math isn’t always straightforward.

Planning around the RRIF in the bigger picture

The RRIF doesn’t exist in isolation. It’s one piece of a retirement income puzzle that includes CPP, OAS, TFSAs, maybe a workplace pension, and possibly rental income or non-registered investments. The order you draw from these sources, and how much you take from each, can make a real difference in your total tax bill over a 25- or 30-year retirement.

If you’re years away from 71, the biggest takeaway is that the RRSP you’re building now will eventually become a RRIF. Knowing that early helps you plan the right balance across accounts. It’s one reason people often suggest prioritizing the TFSA when you’re younger. That money never gets forced out, and it’s never taxed on the way out. The RRSP is powerful too, but it comes with strings that only become visible later. If you own your home and think of it as your retirement plan, it’s worth understanding how that fits alongside registered accounts.

The bottom line

The RRIF conversion isn’t something the bank does to you. It’s a scheduled transition built into how RRSPs work. The money stays invested, but the government starts requiring you to take income from it, and that income is taxed. The minimums start modest and climb every year. Planning for this early, especially by diversifying across account types, gives you more flexibility when the time comes.

The RRIF explained: what happens to your RRSP at 71