Understanding Registered Retirement Income Funds (RRIFs)
Registered Retirement Income Funds (RRIFs) play a crucial role in providing retirees with a reliable source of income post-retirement. RRIFs are designed to provide retirees with financial flexibility and security, offering tax-efficient income streams throughout their retirement years, offering several key advantages and considerations:
- RRIFs are funded typically by rolling over your investments as they are currently invested (in-kind) from an RRSP, as RRSPs cannot be maintained beyond the end of the calendar year you turn 71
- Funds within a RRIF can only originate from another RRIF, an RRSP, or another pension plan, ensuring they are designated for retirement income
- While capital and earnings within a RRIF grow tax-free, withdrawals are subject to taxation at the time of withdrawal
- Unlike Locked-In Plans, RRIFs have no maximum withdrawal limit, but there is a mandatory minimum withdrawal amount based on the account holder’s age (see chart below)
- Withdrawals beyond the minimum amount are subject to varying degrees of withholding tax, providing flexibility with tax implications
RRIF withdrawal rules
In the calendar year after you open a RRIF, you have to start withdrawing money from it. The minimum amount is based on your age and a percentage of the value of your RRIF on January 1.
RRIF minimum withdrawal chart | ||||||||||||||
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Age | RRIF Factors | Age | RRIF Factors | Age | RRIF Factors | Age | RRIF Factors | |||||||
55 | 2.86% | 65 | 4.00% | 75 | 5.82% | 85 | 8.51% | |||||||
56 | 2.94% | 66 | 4.17% | 76 | 5.98% | 86 | 8.99% | |||||||
57 | 3.03% | 67 | 4.35% | 77 | 6.17% | 87 | 9.55% | |||||||
58 | 3.13% | 68 | 4.55% | 78 | 6.36% | 88 | 10.21% | |||||||
59 | 3.23% | 69 | 4.76% | 79 | 6.58% | 89 | 10.99% | |||||||
60 | 3.33% | 70 | 5.00% | 80 | 6.82% | 90 | 11.92% | |||||||
61 | 3.45% | 71 | 5.28% | 81 | 7.08% | 91 | 13.06% | |||||||
62 | 3.57% | 72 | 5.40% | 82 | 7.38% | 92 | 14.49% | |||||||
63 | 3.70% | 73 | 5.53% | 83 | 7.71% | 93 | 16.34% | |||||||
64 | 3.85% | 74 | 5.67% | 84 | 8.08% | 94 | 18.79% | |||||||
95+ | 20.00% |
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