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You can think of a Registered Retirement Income Fund (RRIF) as an extension of your Registered Retirement Savings Plan (RRSP). Your RRSP is used to save for your retirement while a RRIF is used to withdraw income during your retirement.

RRIFs are similar to RRSPs in several respects. Each allows for tax–deferred growth, offers several investment options and are government regulated.

A major difference between an RRSP and a RRIF is that with an RRSP, you can make annual contributions as long as you have earned income and contribution room available. Withdrawals are optional and will be taxed. With a RRIF, contributions are not allowed and you must make minimum mandatory withdrawals each year.


When to create a RRIF

An RRSP is required to be converted to a retirement income option such as a RRIF by December 31 of the year in which you turn 71. However, you do have the option to convert your RRSP to a RRIF at anytime before then.

Also see: RRSP Strategies at age 71


How does a RRIF work?

The Canada Revenue Agency (CRA) requires that you take minimum payment amounts out of your RRIF each year. That amount is determined at the beginning of each year by a calculation that uses your age and the market value of the assets in your account as of December 31 of the previous year.

RRIF payments are considered taxable income in the year they are withdrawn and will be added to your income for tax purposes. RRIFs are extremely flexible - you may make withdrawals as often as you like and you may withdraw over your minimum annual amount.

Use our calculator to determine your minimum annual RRIF payments at various ages throughout retirement.

A major advantage of a RRIF is that your balance continues to grow tax-sheltered until withdrawn.

The rules and regulations governing RRIFs can be complex and are subject to change. An RBC® advisor can review your goals with you and help you determine the retirement income and investment options that are right for you.


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