What Is A RRIF?

An RRIF, which stands for Registered Retirement Income Fund, is an extension of your RRSP. It's simply a continuation of your RRSP, but with a twist: you can't make regular contributions to an RRIF - only withdrawals. That's because the main purpose of an RRIF is to provide a source of ongoing retirement income. There are no limits on withdrawals and the balance of your savings can continue to grow tax-free (until withdrawn).

How Does A RRIF Work?

RRSPs have a limited shelf life and must be wound up by the end of the year in which you reach age 71. A RRIF is one of the most flexible and tax-effective ways of generating income in retirement as you phase-out of the workplace or retire.

• Convert your RRSP to a RRIF by the end of the year you turn 71—or sooner if you need the income. Your investments transfer directly and do not have to mature or be liquidated.

• Start taking withdrawals the year after you open your RRIF. This can be any amount, as long as you meet the minimum annual withdrawal as set out by federal regulations.

• Report withdrawals as income on your tax returns. RRIF funds are taxable in the year you withdraw them.

Benefits of a RRIF

• Defer Tax On Income Like an RRSP, you can hold and grow a variety of investments such as a GIC, mutual funds, bonds, and equities tax‑sheltered in a RRIF.

• Control Your Income As long as you take the required minimum amount, decide when and how much to withdraw. Option to convert to an annuity later.

• Transfer Assets Tax Free RRIFs let your spouse inherit your retirement savings tax‑free, easing some of the financial pressure your absence may cause.

Below are ways to invest your funds either as a self-directed investor or with professional assistance.