RRIF: Everything You Need to Know About RRIFs

Most Canadians choose a Registered Retirement Income Fund (RRIF) as their retirement income option. A RRIF is a comfortable transition because of its similarity to an RRSP. A RRIF provides a high level of control over the investments in your retirement plan, the advantage of tax-free growth of assets within the plan, as well as maximum flexibility in establishing an income stream. RRIFs come in a number of shapes and sizes.

The first decision is income

The first thing you will need to determine is how much income you need or want. This decision will have the greatest impact on the longevity of your money. If you spend too much too fast, you will run out of money. Even if you don’t need or want the extra income, you have the minimum income rules to contend with.

You can tailor your income to your needs, subject to minimums imposed by the federal government. If you need steady monthly, quarterly, or annual income, it’s available. If you require a large lump sum for a major purchase, travel, or some other purpose, that’s available too.

RRIF withdrawal rules

This table outlines the minimum withdrawals on RRIFs established after 1992, as set by the government. Before age 71, the minimum percentage payout is worked out in the following way: 1÷(90 – your current age).  RRIF minimums were once again changed in 2015

So if you’re 65, your minimum withdrawal would be 1÷(90-65)=4%. With a $100,000 RRIF, that amounts to $4,000. Once you reach age 69, the following schedule applies:

Age 2015 and later 1992 to 2015 Pre 1992
65 4.00% 4.00% 4.00%
66 4.17% 4.17% 4.17%
67 4.35% 4.35% 4.35%
68 4.55% 4.55% 4.55%
69 4.76% 4.76% 4.76%
70 5.00% 5.00% 5.00%
71 5.28% 7.38% 5.26%
72 5.40% 7.48% 5.56%
73 5.53% 7.59% 5.88%
74 5.67% 7.71% 6.25%
75 5.82% 7.85% 6.67%
76 5.98% 7.99% 7.14%
77 6.17% 8.15% 7.69%
78 6.36% 8.33% 8.33%
79 6.58% 8.53% 8.53%
80 6.82% 8.75% 8.75%
81 7.08% 8.99% 8.99%
82 7.38% 9.27% 9.27%
83 7.71% 9.58% 9.58%
84 8.08% 9.93% 9.93%
85 8.51% 10.33% 10.33%
86 8.99% 10.79% 10.79%
87 9.55% 11.33% 11.33%
88 10.21% 11.96% 11.96%
89 10.99% 12.71% 12.71%
90 11.92% 13.62% 13.62%
91 13.06% 14.73% 14.73%
92 14.49% 16.12% 16.12%
93 16.34% 17.92% 17.92%
94 18.79% 20.00% 20.00%
95+ 20.00% 20.00% 20.00%

The second decision is what to invest in

Reading BooksFinancial institutions offer plans that can hold Guaranteed Investment Certificates (GICs), mutual funds, cash, or other financial instruments. Alternatively, you can establish a self-directed RRIF to include a combination of individual securities in your plan, such as stocks, bonds or Treasury bills (in addition to the investments mentioned above).

Related article:  Advantages of a Self-Directed RRSP

RRIFs offer investment flexibility. You can hold the same investments that are eligible for an RRSP. Shares of Canadian corporations, corporate and government bonds, Canada Savings Bonds, Treasury bills, mortgages, GICs, term deposits, covered call options, warrants, rights, and mutual funds that invest in eligible securities are all qualifying investments. You can also hold a limited percentage of your RRIF in foreign investments. Just like an RRSP, a RRIF lets you retain control over your investments, rather than handing over your money to a third party.

The longevity of your RRIF is simply based on how much money you make in investment return and how much you take out for income. It does not take a lot of mathematical know how to figure out that if you earn more money than you withdraw in income, the RRIF will grow.

Related article:  Retirees should be more conservative with their investments

For example, if you invest in a GIC RRIF at 6% and you take out the minimum (4.76%) at age 69, your RRIF should grow by 1.24%. At age 72 given the same investment return, the minimum is now 7.48%. This means your RRIF will deplete in value by 1.48% (7.48%-6.00%).

What will happen to your RRIF when you die?

You can leave your remaining RRIF assets to your heirs upon your death by designating the proper beneficiary. Not all other retirement income options provide for this. Naturally, your desire to provide an estate for your spouse, beneficiaries or charities may have an impact on how you set up your RRIF. While this may or may not be an issue, income and investments should remain the priorities.

RRIFs are flexible

One of the benefits of the RRIF is the flexibility you have in dictating income. These are some common types of RRIFs.

  • Minimum income RRIF – This RRIF provides the minimum level of income. Typically, people who choose the minimum income RRIF are those who do not need the money and want to defer taxable income for as long as possible. Remember, if this is the case, you can base the RRIF on the age of your younger spouse.Furthermore, remember the RRIF minimum income is based on the value of the RRIF on December 31 of the previous year. Sometimes this can make income planning difficult because you really don’t know what your income will be until the last minute.
  • Capital preservation RRIF – Preserving capital and paying out a fixed level of income are the goals of this RRIF type. In this case, you will withdraw your investment returns each year (subject to minimums). If you are using mutual funds, you might elect a reasonable target return like 8%, for example, with the hopes and intentions of earning 8% to maintain the capital.
  • Level income RRIF – If you want to provide income for a specific period of time such as to age 90, this RRIF would be the right choice. In this instance, you would determine the amount of income you could derive so that the entire asset would be depleted by the time you reach 90 years of age. You can use age or time frame.

Have as many RRIFs as you want

You can have as many RRIFs as you want. You can have one that pays a level income for the next 5 years to bridge income until government benefits. You can have another that is a capital preservation RRIF for a more stable long term level of income.

Generally, many people consider consolidating into one RRIF. With a single RRIF, you can easily manage your investments and you’ll only have to worry about one minimum withdrawal. Several RRIFs require more time and energy, and you’ll have to arrange to withdraw at least the minimum from each one.

Withholding tax details

RRIF income is subject to government withholding tax rates. Just like your employer withholds taxes and remits them directly to the government, your RRIF administrator is required to do the same. Minimum income RRIFs are not subject to withholding tax, but you can request any level of withholding tax desired. In all other circumstances, there is a 10% withholding rate on withdrawals less than $5000, 20% on withdrawals between $5000 and $15,000 and 30% tax on withdrawals over $15,000.

As you can see, there are a lot of issues to deal with when it comes to planning your RRIF income. Take the time to plan wisely.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

43 Responses to RRIF: Everything You Need to Know About RRIFs

  1. If I have a personal RRSP and a spousal RRSP, can I collapse them into the same RIF or do I need two separate RIFs?

    • Thanks for the comment.
      You can combine the two but if you do, all the money is considered spousal money. As a result there can be a risk that the income is attributed back to your spouse who made the contribution.

      More often than not, I suggest keeping the pots separate.
      I hope that helps!

  2. When receiving funds from a R.I.F. by inheritance What if any taxes are there, and who has to deal with them, or do they have to be in the estate.The RIF was not in the will, and was paid out from the bank before any probate etc.

  3. Hi Jim

    I must convert my RSPs to a Riff by December 31st of this year. How much lead time do I need – in other words how long does the Riff take to set up? I also plan to use about one third of my RSP to fund a non arms length mortgage rather than buying my retirement home on Vancouver Island with a conventional mortgage. What are the pros and what are the cons to taking out a non arms length mortgage? The con I think is if the housing bubble deflates and Real Estate prices “correct” – but the advantage is that I will be able to save a lot of the the interest and pay myself back rather than handing over the profits to another lender.

    • I held our mortgage inside my rrsp for years. One could only abide by current rates and not charge percentages that where completely outside rates that where too low or too high but would reflect current market . At that time our mortgage rate was 9percent. Which was paid to my Rrsp and was reinvested in whatever, stocks etc. The cash or equities would grow tax free as the mortgage was paid over time. Obviously, one had to have enough funds to provide for the mortgage in theRRSP in the first place. There were also some fees required to set up the plan, but it worked out well for us. I certainly liked the idea of paying oneself and the this would accumulate tax free inside a self directed RRS

  4. Thank you for your articles on Retiring. They are so helpful.
    Just recently I have heard on a TV program about another option for transferring RRSP money out–instead of moving to RRIF, one can move it to “ACP”. This type of “account(?)” will decrease the tax amount to be paid. Can you tell me what ACP is? How it works? Is it only for province of British Columbia? Nobody seems to know what it is. I only caught the tail end of the program.
    Please can you help?

    • Can a withdrawal of $4000 be made from a RRIF in the same year the RRIF is opened and can this $4000 withdrawal be spilt with spouse to take advantage of the federal tax credit with each spouse claiming $2000. We are 71 and 65 and the RRIF was opened in 2015

  5. What amount is guaranteed by the government of funds in a RRIF ??
    If I invest $500,000.00 with one investment company, is it guaranteed should the investment company become insolvent??

    • Hey Jerry, it depends on what you invest in and which financial institution:

      Mutual Funds are not insured at all because you own the underlying assets in the fund.

      Generally, only deposit products like GICs are insured. (CDIC and Assuris)

      Some Life Insurance Seg products are insured through Assuris.

  6. Thanks for the info. Just a question about Canada Retirement Savings Plan and Canada Retirement Income Fund. What are the differences between the two? Any idea? I only know they’re related to the Canada saving bond and that they receive compound interest.

  7. I have questions about investing a RRIF in a GIC. Does a 5-year term GIC allow me to withdraw money on a monthly basis? Does the accrued interest shrink as the principal drops?

  8. I have my RIFF’s invested with Woodgundy. The funds that are invested have done very poorly. My advisor keeps saying to leave them where they are, but I have NOT had any gains whatsover, (slight losses) in over 5 yrs. Any suggestions?

    • My personal advice to y is to invest in a fund that holds Microsoft, Apple, Johnson & Johnson, Coke-Cola, Easson Oil, Google.,,,,,,etc. Bank stocks and utility companies are also my first choice. I don’t have time to check out Woodgundy. I would do my own research and not let anyone to make stupid decision on my behalf because they don’t have a vested interested in your finance affair.

  9. In a self directed RRIF that contains non liquid assets such as stocks, I assume I would need to ensure there is enough cash in the account to cover my designated withdrawal amount? What happens if there isn’t? Would the financial institution notify me to liquidate some more assets?

    • I kept getting a minus amount in the cash balance of my RIF statement and eventually I got a notice telling me to sell some stock share to get into a positive cash balance. I did this as well as lowering my RIF so I stay in a cash balance now without having to sell more shares.

  10. Is there a regulation that indicates the time frame when a bank should be able to transfer RRIF to another bank if requested by the RRIF holder? I have been trying to transfer mine since October 2013 but up to now the bank has not done so. They keep on giving me a lot of excuses for not doing so, and I am at a point when I am thinking of further action against them. Your opinion will be much appreciated.

  11. Hi Jim; I will be turning 65 this year 2014, & have read there are tax credits that kick in to the tune of approx $6700+ for incomes of under $33K, which I fall into. All of my income if from pensions. Would it be prudent to move all of my RRSPs into a RIFF now, & withdraw the $6700.00 out of the RIFF each year & put it into a TFSA as I have room, thus reducing the tax hit at 71 & beyond.This seems so simple, am I assuming something erroneously?
    Thanks for your take on this Jim.

  12. my wife and I are both retired and are in our early 50s, we have 200.000 in RRSP now, Should we start withdrawing from the RRSP at age 60 ( can we do this monthly)or should we wait until 70 and turn it into a RRIF and than start monthly withdraw

    • Helo Trapper, I live in Toronto. My personal advice to you is to take it out sooner in smaller amount, in order to avoid paying too much tax. If you wait too long, you will have to take it out in larger amount and face higher taxes. In my case if I used up all my RRSP/RRIF in just 10 yrs. I have to pay withholding tax $53,000. However, if I used it up in 15 yrs. I only pay withholding tax $30,000 plus, and in addition I accumulate more interest in my RRSP/RRIF in the amount $30,000 if I leave it longer in my plan.

  13. I have a RRIF, which I opened this year. In 2015, 3 of my RRSPs are maturing, is it TRUE that I can add the maturing RRSPs to the existing RRIF. The maturing RRSPs are NOT new RRSP contributions. Thanks.

  14. Hello Jim,

    Next year I turn 71 and I know I have to convert my current RRSP into a RIF, and that has to be done by December 31st of the year.

    So suppose I do set up the RIF in December of that year. My question is, do I have to make that minimum withdrawal in that same year, ( 2016), or can I wait until January of the next year to actually make a withdrawal?

  15. Once my Riff is set up with a financial institution,can I move it, in whole or in part, to set up another riff with another financial institution? Laurie

  16. As of May 2015, this article contains a mix of old and new information, including the misstatement that the RRIF withdrawal rate at age 72 is 7.48%, and rates of return that are completely unrealistic in today’s market (6% GICs, 8% ROE). This could confuse naive readers and warrants another edit.

  17. I have a quick question. When I invest in a RIFF can I get paid monthly? Are there banks/companies that would send me a monthly cheque proving I get a monthly pension? The reason I am asking is for proving I get a monthly pension payment to apply for a Visa that requires proof that I get a pension paid monthly.

  18. I’m looking to Move a RIF into a mortgage – essentially to give the funds to a family member. Can my son then pay off the mortage and as he does that the funds come back to me?

    If I can do this I have found very little info about how to do it or who can do it. I want to set up the mortgage quickly any suggestions where I should start looking in Ontario?

  19. If I move all the money in my RRSP to a RIF at once, will that count as income ( withdrawing from the RRSP) and will there consequently be a withholding tax? I am in Ontario and aged 66.

    • I’m not a finance professional, but I know that, so long as you are converting an RRSP to a RRIF, you are not considered to be withdrawing the money, and you are not taxed. (I have done it). Of course, when you withdraw money from the RRIF you will pay tax on it.

      You don’t have to convert the whole RRSP to a RRIF. You can convert part of it if you wish.

      Did you know that if you are 65 or older, you can claim $2000 of this withdrawal as a pension tax credit?

  20. I notice that many folk here are asking questions expecting Jim to quickly answer however, he is not a missionary organization, he has a family, and if you really need a detailed answer you can always pay him for his professional advice…just saying

  21. At some point in 2017 I must convert my RRSPs to RRIFs. The question is, can I amalgamate several RRSPs into one RRIF or must I open a RRIF for each RRSP? Thank you.

  22. Hi Jim,

    My mother withdrew funds from her RRIF over a period of several months each time in amounts less that $5000 and the bank appropriately withheld the 10% tax. In total she withdrew $35,000. I just took a look at the expected tax implications and she will get hammered pretty hard as her higher annual income will result in moving her to a higher tax bracket.

    With a couple of weeks left in the year is there something that I can do to help mitigate the tax due? She is in position to repay the fund, but that does not appear to be an option as only funds from a registered plan can be used to establish a RRIF.

    Any thought on options would be appreciated.


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