96512 FS_35174_RRIF_0916_E.indd (2024)

FAQs

How much do I have to withdraw from my RRIF each year? ›

Based on the minimum withdrawal amount of 7.38%, you must withdraw at least $14,760 in 2022. This means you can leave an additional $185,240 in your RRIF to continue to grow tax.

A registered retirement income fund (RRIF) is an arrangement between you and a carrier (an insurance company, a trust company or a bank) that we register. You transfer property to your RRIF carrier from an RRSP, a PRPP, an RPP, an SPP, from another RRIF, or from an FHSA and the carrier makes payments to you.

There is no minimum annual withdrawal for RRSP accounts. However, by the end of the year that you turn 71, you must close your RRSP. One option when closing your RRSP is to convert it to a registered retirement income fund (RRIF).

In the year you turn 71 years old, you have to choose one of the following options for your RRSPs: withdraw them. transfer them to a RRIF. use them to purchase an annuity.

Your advisor and accountant may recommend a partial early conversion, where you convert some of your RRSP to RRIF before age 71. This may let you take advantage of the pension income tax credit and save tax, if you're 65 or older.

Before implementing this strategy, consider the following factors: The maximum amount of the federal annual tax savings is limited to $300. If you are in a higher tax bracket, the $2,000 of eligible pension income you receive will not be tax-free. You will have to pay the incremental tax at your marginal tax rate.

Because RRIF withdrawals are considered taxable income, taking money out too early or more than you need could put you in a higher tax bracket and leave you with a larger tax bill. Withdrawals could also potentially reduce certain government benefits, like Old Age Security (OAS).

It is possible to hold US equities within a RRIF, as per the Tax Treaty Between Canada and the U.S. dividends from U.S. corporations may be exempt from a withholding tax for investments held within a registered retirement account.

Amounts received from a RRIF upon the death of an annuitant can be transferred directly or indirectly to your RRSP, to your RRIF, to your PRPP, to your SPP or to buy yourself an eligible annuity if you were a qualified beneficiary of the deceased annuitant.

Let's illustrate this with a simple example: if you have $100,000 in your retirement savings, under the 7% rule, you would withdraw $7,000 each year.

What happens to a LIRA at age 71? ›

Your LIRA must be converted to a life annuity fund or another retirement-based type fund (Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF)) before the end of the year in which you turn 71. Financial institutions can charge high management fees for LIRA.

Although you cannot contribute to your RRSP after December of the year you turn 71 years old, you can still contribute to your spouse's or common-law partner's RRSP until the December of the year that they turn 71. For more information, see RRSP options when you turn 71.

Our response: Canadian citizens that have become non-residents can continue to hold RRSPs after leaving Canada.

If they worked in Canada they are entitled to their Canadian Pension and there is another program that will kick in if that is not enough to live on, the guaranteed income supplement. I live in Alberta and collect both of those. (I'm 65) They provide enough income to live on.

You can withdraw securities from a RRIF at their fair market value and transfer them to a TFSA without having to sell them first. You'll need to include the value of the withdrawal on your annual tax return and tax will be withheld on the fair market value of the securities in excess of your minimum withdrawal amount.

RRIFs have minimum annual withdrawals based on your age or your spouse or common-law partner's age and on the account value – both at the beginning of the year. You must continue to take at least these minimum withdrawals until no funds remain. Minimum withdrawals must start in the year after you open your account.

Converting an RRSP to a RRIF

However, an RRSP must be converted to a RRIF or annuity, or paid out in a lump sum by the end of the calendar year in which you turn age 71. If you convert your RRSP to a RRIF, payments will not be required until the calendar year following the year the RRIF account was opened.

The 4% rule for retirement budgeting suggests that a retiree withdraw 4% of the balance in their retirement account(s) in the first year after retiring, and then withdraw the same dollar amount, adjusted for inflation, every year thereafter.