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What is a RRIF, and how does it work?

So, for as long as you can remember, you’ve been saving for retirement inside your RRSP account. And now, retirement is just around the corner. Good news: it’s almost time to start using those hard-earned savings inside your RRSP. Mediocre news: your RRSP doesn’t just start paying you, there’s a little more to it than that. When you start needing income, your RRSPs need to convert to a Registered Retirement Income Fund, or, a RRIF.  Not exactly sure what that means? We’ve got you covered—read on to find out.

What is a RRIF?

Think of Reregistered Retirement Income Fund (RRIF) as the evolution of your RRSPs. Just like your RRSP, a RRIF is a retirement income fund registered with the government.

Essentially, you save your retirement money inside an RRSP, and when the time comes, you need to convert that RRSP into a RRIF so you can start to withdraw from it. RRIFs are not meant for a one-time withdrawal, they’re best used as a source of steady income during retirement.

When’s the right time to convert RRSPs to a RRIF?

The answer to that will depend on when you need the income.  It would make sense to potentially convert your RRSP to RIF when you are looking to generate a monthly or quarterly income.  The latest you can convert is December 31 of the year you turn 71 as they must be converted by that age.

How much can you withdraw?

With a RRIF, you have to withdraw a minimum amount every year. The amount is a percentage depending on the year. It’s best to check out the federal government website or talk to your financial advisors to figure out the right amounts for your life. RRIF calculator.

If you want a breakdown of the numbers, visit the CRA website for a helpful chart.

What are the tax rules with a RRIF?

Funny thing, so you know how you deposit money into an RRSP account throughout your life to defer the taxes? For example, to pay a lower tax bracket or get a bigger tax refund? Well, unfortunately, those funds when being withdrawn from a RRIF become subject to taxation again. When it comes to your RRIF and taxation, there are some options for any tax payable. Your best bet is to reach out to your advisor to work through it all.

What are the tax benefits?

There are benefits to a RRIF like if you need to take advantage of the pension tax credit, there’s a certain amount you can withdraw tax-free. If you’re over 65 you get a tax credit on the amount up to $2,000 of that income. Some people start withdrawing at this time to ensure they don’t pay taxes on that $2,000.


Reach out to a Coast Capital Financial Advisor to better understand all the investment options available to you.


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This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Coast Capital Savings Federal Credit Union is not responsible to update this information. All third-party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

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