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 rise with age — and the age that counts is your age on January 1, not your age when you take the money out. There is no minimum at all for the year you open the RRIF: the Income Tax Act sets the minimum amount for that year to nil. Your first required withdrawal is for the next calendar year, the year you turn 72 — you are 71 on January 1, so the prescribed factor is 5.28% of the January 1 balance. It rises to 5.40% the year after that, 6.82% at 80 and 11.92% at 90, again by age on January 1. 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.
How it works
The minimum withdrawal percentage isn't a fixed dollar schedule — it's recalculated every January 1st against that year's opening balance, so market performance changes the actual dollar amount you must withdraw even though the percentage itself is set by legislation and rises with your age each year.
Withholding tax works differently on a RRIF than you might expect: the mandatory minimum withdrawal itself typically isn't subject to source withholding, since it's already a known, scheduled amount. Only the portion you withdraw above the minimum has tax withheld at source, at 10% up to $5,000, 20% on the next $5,001 to $15,000, and 30% above that. Either way, the full withdrawal is taxable income when you file — under-withholding can leave you owing more at tax time.
You can elect to base your RRIF minimum on a younger spouse's age instead of your own, which lowers your required withdrawal and defers tax. RRIF income also qualifies for pension income splitting and the pension income amount credit starting at age 65, an advantage RRSP withdrawals don't have before age 71 — which is why some retirees convert part of their RRSP to a RRIF earlier than required, purely for that income-splitting eligibility.
Example: Minimum withdrawal and withholding tax
There is no minimum for the year you open the RRIF, so the first one falls in the following calendar year — the year you turn 72, when you are 71 on January 1. With a $200,000 balance on that January 1, the 5.28% prescribed factor gives a $10,560 minimum. The year after that the factor is 5.40%, so the minimum on the same balance would be $10,800.
If you withdraw $20,000 instead of that $10,560 minimum, the $9,440 excess falls in the $5,001–$15,000 withholding band, so roughly 20% — about $1,888 — is withheld at source on that excess portion, on top of whatever, if anything, was withheld on the minimum itself.
Frequently asked questions
Can I withdraw more than my RRIF minimum in a given year?
Yes, there's no maximum on RRIF withdrawals — you can take out as much as you like, but any amount above the annual minimum has withholding tax deducted at source.
Is tax withheld on my mandatory minimum RRIF withdrawal?
Typically not at source, but the minimum is still fully taxable income when you file your return, so make sure you've set aside enough to cover the eventual tax owing.
Can I base my RRIF minimum withdrawal on my spouse's age?
Yes — electing to use a younger spouse's age lowers the required minimum percentage, which reduces your mandatory withdrawal and defers more of the tax.
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.