A RRIF is a tax-sheltered retirement income option for converting RRSP funds. It can provide you with an income to last your lifetime – or a shorter predetermined period of time if you’d prefer. Since this income is spread out over a number of years, an opportunity to reduce the amount of tax you pay on withdrawals is possible.
Subject to minimum withdrawal requirements, we offer a variety of flexible RRIF options that allow you to set the payment that works for you. We can also assist in ensuring withdrawals are done in the most tax efficient way possible.
You don’t need to wait until age 71 to convert your RRSP to a RRIF, and you don't have to take an income payment the year the RRIF was opened either. However, after that first year, you must withdraw a minimum annual payment which is based on either your age or your spouse’s age, as well as the total value of your RRIF on December 31st.
Although you must convert your RRSPs to RRIFs the year you turn 71, converting sooner may be in your best interest! Taking out smaller amounts over more years may reduce your ultimate tax bill. Also, income from a RRIF qualifies for the Pension Tax Credit once the holder is 65. To find out what strategy might be best for you, contact us today!