RRSP options when you turn 71 (2024)

FAQs

RRSP options when you turn 71? ›

An RRSP must mature by December 31 of the year in which you turn 71. On maturity, the funds must be withdrawn, transferred to a RRIF or used to purchase an annuity. You will not be able to make any further contributions to your individual RRSP after this date.

An RRSP must mature by December 31 of the year in which you turn 71. On maturity, the funds must be withdrawn, transferred to a RRIF or used to purchase an annuity. You will not be able to make any further contributions to your individual RRSP after this date.

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.

You can convert your RRSP holdings to a RRIF at any time. 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.

Continue to save after age 71.

You have to convert it to a registered retirement income fund (RRIF) or payout annuity by the end of the year you turn 71. Or, you'll have to take the RRSP money in cash (and pay tax on it). But you can keep your TFSA open. And you can keep contributing to it as long as you wish.

Spousal RRSPs come with a three-year attribution rule, which only permits withdrawals three years after the deposit date. So, for example, if you deposit funds into a spousal RRSP on January 1, 2024, your spouse or common-law partner won't be able to withdraw the funds until January 1, 2027.

Disadvantages of spousal RRSPs

Also, spousal RRSP contributions cannot be withdrawn in the three calendar years following the year those contributions were made, otherwise the contributor will be retroactively taxed. (This is called the Three Year Attribution Rule.)

While a RRSP helps you to save for retirement, a RRIF provides income during retirement through regular withdrawals of prior savings from your RRSPs. You can hold the same investment options (mutual funds, ETFs, GICs, etc.)

What are the disadvantages of RRIF? ›

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).

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.

Mandatory RRSP Withdrawals at Maturity

Your RRSP reaches maturity on the last day of the calendar year you turn 71.

Even though you can no longer contribute to your RRSPs after the year you turn 71 years old, you can deduct unused RRSP contributions up to the amount of your RRSP deduction limit. You do not have to claim the undeducted contributions in a single year.

December 31 of the year you turn 71 years old is the last day that you can contribute to your RRSPs.

Your RRSP reaches maturity on the last day of the calendar year you turn 71. At this point, you can access your RRSP assets through 3 maturity options. The tax implications of your decision depend on the option that you choose.

Hands down, one of the biggest factors in deciding if an individual should contribute to their RRSP after 60 is the marginal tax rate. The marginal tax rate is how much an individual pays on every additional dollar of income they earn.