RRIF (Registered Retirement Income Fund)
A RRIF is the account you convert your RRSP into when you're ready to start drawing retirement income. You must convert your RRSP to a RRIF (or purchase an annuity) by December 31 of the year you turn 71. The RRIF continues to hold your investments and shelter growth from tax — the key difference is that minimum annual withdrawals are required.
Minimum withdrawal percentages are set by the government and increase with age. At age 72 (the first full year of mandatory withdrawals), the minimum is 5.28% of the January 1 balance. By age 80 it rises to 6.82%, and by age 90 to 11.92%. You can always withdraw more than the minimum, but not less.
All RRIF withdrawals are taxed as regular income at your marginal rate. Tax is withheld at source on amounts exceeding the annual minimum (10% on amounts up to $5,000, 20% on $5,001–$15,000, 30% above $15,000). You can base the minimum withdrawal on your younger spouse's age to reduce required withdrawals.
Related Terms
RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal.
Pension Adjustment (PA)
If you belong to a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP) through your employer, your employer reports a Pension Adjustment (PA) on your T4 slip.