RRIF Minimum income rules

RRIF Minimum income rules

When you reach retirement and it comes time to take regular income out of your RRSPs, the vehicle of choice is the Registered Retirement Income Fund (RRIF). Although you can make withdrawals from a RRSP, the point of a RRSP is to accumulate funds for retirement. That’s why they call it a savings plan.

The RRIF is much like an RRSP from the perspective that you can invest in lots of different things like GICs, bonds, mutual funds, stocks, etc. As long as the money stays in the account, whether it is a RRSP or RRIF, the money continues to grow tax deferred. The RRIF differs from an RRSP in that you cannot put direct contributions into a RRIF and with a RRIF, you must take out a minimum amount each and every year. This is called the Minimum Income.

How is the minimum income determined?

Here’s the formula for the minimum income on the RRIF:

1 / (90- age)

For example, if you are 65 years of age, 90 minus 65 is 25. One over 25 is 4%. At 65, you must take out at least 4% of the RRIF balance at the beginning of the year in income. If you had $100,000 in the RRIF, you would need to take out at least $4000.

Age2015 and later1992 to 2015Pre 1992
654.00%4.00%4.00%
664.17%4.17%4.17%
674.35%4.35%4.35%
684.55%4.55%4.55%
694.76%4.76%4.76%
705.00%5.00%5.00%
715.28%7.38%5.26%
725.40%7.48%5.56%
735.53%7.59%5.88%
745.67%7.71%6.25%
755.82%7.85%6.67%
765.98%7.99%7.14%
776.17%8.15%7.69%
786.36%8.33%8.33%
796.58%8.53%8.53%
806.82%8.75%8.75%
817.08%8.99%8.99%
827.38%9.27%9.27%
837.71%9.58%9.58%
848.08%9.93%9.93%
858.51%10.33%10.33%
868.99%10.79%10.79%
879.55%11.33%11.33%
8810.21%11.96%11.96%
8910.99%12.71%12.71%
9011.92%13.62%13.62%
9113.06%14.73%14.73%
9214.49%16.12%16.12%
9316.34%17.92%17.92%
9418.79%20.00%20.00%
95+20.00%20.00%20.00%

You can see that at age 71, the minimum income changes and no longer follows the formula 1/(90-age) formula.  At 71, the minimum income amount is predetermined by the government. You can see that as you get older, the minimum percentage increases.

The government introduced a new minimum income schedule in the 2015 Federal Budget lowering the amount of money required for withdrawals starting at the age of 71.  Income used to jump dramatically to 7.38% but that was lowered to 5.28%.

For more information on RRIFs, check out one of Jim’s most popular articles:  Everything You Need to Know About RRIFs

Comments

  1. Lawrence Bernstein

    Good information. Thanks. I do have one question: My wife is 20 years younger than I am.
    Am I able to use her age when I turn 71 to estimate my minimum amount of RRIF withdrawal?
    The formula would be 1/(90-61)?

  2. Bernie

    I have the same question but my spouse is 31 years younger.
    Would my formula, at 71, be 1/(90-40)?

    • Jim Yih

      Sorry for the delayed response. Yes to the both of you. You can use your spouses age for the minimum income calculation.

      • Fred Rosmanitz

        How does CRA deal with a situation wherein a person does make the annual minimum withdrawal from theiR RIF?

  3. James Lundholm

    I have a pension from Civil Service (35 years); Military – USAR 29 years) and Social Security. I My annual income is $124,000.00 from these three sources. I am currently working and earn $124,000.00 per year. I have Blue Cross, Medicare and Tricare for life (plus delta Dental). Do I need to work any more additional years for retirement? James W. Lundholm

  4. Fred Rosmanitz

    How does CRA deal with a situation wherein a person does make the annual minimum withdrawal from my RIF?

  5. Maureen

    So if I understand this correctly, if the minimum withdrawal at 65 from a RRIF is 4%, I could transfer $50,000 from my RRSP to a RRIF (both self directed) and take out $2000 (4%) that first year and then claim $2000 deduction for it on my year end taxes.

    I can continue to do that until 71 when I have to bring everything else over from RRSP to RRIF and then the withdrawal amounts will increase because of the increased funds.

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