RRIF (Registered Retirement Income Fund)
The account your RRSP converts to by age 71, requiring you to withdraw a minimum amount each year.
A RRIF, or Registered Retirement Income Fund, is what your RRSP becomes when it’s time to start taking money out. By December 31 of the year you turn 71, you’re required to convert your RRSP to a RRIF (or use the money to buy an annuity, or withdraw it all). Most people choose the RRIF.
Once your RRSP becomes a RRIF, the account works similarly. Your investments can stay invested and continue growing. The key difference is that you must withdraw a minimum amount every year, and those withdrawals are taxed as income.
Why it matters
The government gave you a tax break when you contributed to your RRSP. The RRIF is how they eventually collect. The minimum withdrawal percentage starts low (around 5.28% at age 71) and increases each year as you get older. By age 95, the minimum is 20% of the account value.
You can always withdraw more than the minimum, but you can’t withdraw less. And every dollar you withdraw counts as taxable income for the year. If you withdraw too much in a single year, it could push you into a higher tax bracket or affect your eligibility for income-tested benefits like OAS.
This is why some financial planners suggest drawing down your RRSP strategically before you’re forced to convert it at 71. By taking some withdrawals in lower-income years (like early retirement before CPP and OAS kick in), you may be able to reduce the overall tax hit.
Your investments inside a RRIF can stay exactly as they were in your RRSP. You don’t need to sell everything and start fresh. The conversion is mostly an administrative change, not an investment one.
A concrete example
Say you convert a $500,000 RRSP to a RRIF at age 71. The minimum withdrawal rate that year is 5.28%, which means you must withdraw at least $26,400. That $26,400 counts as taxable income. If you also receive $15,000 from CPP and $8,700 from OAS, your total income for the year is $50,100, and you’d owe tax accordingly. Withdrawing more than the minimum is always an option, but it increases your tax bill for that year.
Related terms
Registered Retirement Savings Plan (RRSP)
A Canadian registered account where contributions lower your taxable income now, but withdrawals are taxed later.
Beneficiary Designation
A named person who receives the assets in your account when you pass away, often bypassing your will entirely.
Locked-In Retirement Account (LIRA)
A registered account that holds pension money from a former employer, with restrictions on when and how you can withdraw it.
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