Understanding RRIFs

What is a RRIF?

A RRIF is a Registered Retirement Income Fund. Your RRSP can be transferred tax-free to a RRIF to establish a source of retirement income. While you cannot have an RRSP after the end of the year you turn age 71, you don't need to wait until age 71 to set up a RRIF, you can move some or all your funds at any time.

A RRIF lets you defer tax while you grow your money, the same way that an RRSP does. You only pay tax on the money you withdraw.

Minimum annual payment

But unlike an RRSP, you must withdraw a minimum amount annually from a RRIF. The minimum is set by the federal government, and depends on your age and RRIF balance at the start of the year. Minimum payments from a RRIF must start in the calendar year after it was first funded.

Payment flexibility

You can also take more than the minimum. As long as your plan is not "locked in" (because it originally came from a pension plan), there is no maximum withdrawal from your RRIF. Many RRIFs let you vary your payments to meet your income needs.

Base payments on spouse's age?

You may base your RRIF's minimum payments on your spouse's age rather than yours. You must decide when opening your RRIF. Electing your spouse's age for your payments has several possible benefits:

  • if your spouse* is younger, your minimum payment will be lower (much lower if they're under age 71) - this lets you keep more in your RRIF and defer more tax, longer
  • if you want to withdraw more than the minimum required for your age, you can base your payments on your older spouse's age and pay less withholding tax on withdrawals
  • if both your and your spouse's RRIFs are based on the same birthdate, they can be combined into one plan if one of you passes away

Forgot to use your spouse's age when opening your RRIF? (Or have you married or begun a common-law relationship since opening your RRIF?) You can transfer at any time into a new RRIF based on a spouse's age.

*Spouse includes a common-law or same-sex partner.

Minimum payments, when under age 71

When "the age" being used to calculate your RRIF minimum payment is less than 71 at the beginning of the year, your minimum RRIF payment is based on this formula:

(90 minus "the age") divided into the value of your RRIF on January 1.

For example, say your RRIF was $100,000 and "the age" was 70 at the beginning of this year, your minimum RRIF payment would be $5,000.

Minimum payments, when age 71 to 77

If the "age" being used for your RRIF payments is 71 to 77 on January 1, your minimum payment depends on whether it is a "qualifying RRIF".

A "qualifying RRIF", or "Pre-1993 RRIF", was first funded before January 1, 1993 and has not been tainted with

  • RRSP funds added after that date, nor
  • funds transferred from RRIFs first funded after January 1, 1993

Most RRIFs are considered "Post-1992 RRIFs". They have higher minimum withdrawals from age 71 to 77.

See this table for the percentage that must be withdrawn from each type (using the January 1 "age" and RRIF value):

Age Pre-1993 RRIF Post-1992 RRIF
71 5.26% 7.38%
72 5.56% 7.48%
73 5.88% 7.59%
74 6.25% 7.71%
75 6.67% 7.85%
76 7.14% 7.99%
77 7.69% 8.15%

Minimum payment, after age 77

From "age" 78 onwards, all RRIFs use the same withdrawal percentages:

Age Percentage Age Percentage
78 8.33% 87 11.33%
79 8.53% 88 11.96%
80 8.75% 89 12.71%
81 8.99% 90 13.62%
82 9.27% 91 14.73%
83 9.58% 92 16.12%
84 9.93% 93 17.92%
85 10.33% 94 or older 20.00%
86 10.79%    

Withholding tax

Income tax is deducted from RRIF payments exceeding your minimum annual withdrawal. Since no minimum withdrawal is required the first year your RRIF is open, any withdrawal in that first year will have income tax deducted from it.

Withholding tax rates (all provinces except Quebec)

Withdrawal Tax rate*
Up to $5,000 10 %
$5,000 to $10,000 20 %
Over $15,000 30 %

If you want, Vancity can withhold more income tax from RRIF payments. This can be convenient to avoid a large tax bill at the end of the year, and possibly quarterly income tax instalments.

Estate planning

RRIFs can keep estate planning simple. You can name your spouse or partner as your RRIF's "successor annuitant" so that, on your death, they can continue taking income from your RRIF. Alternatively, they can transfer your RRIF to their own RRSP or RRIF, without immediate tax. If you don't have a spouse, or prefer to name another beneficiary, the remaining balance can be paid to your estate or beneficiary (usually the balance will be taxable on your final tax return).

Investment choices

Like RRSPs, your RRIF should be customized to meet your investment  goals and retirement income needs.

A Vancity investment professional can help you review your RRIF investments and income needs. To speak with an investment professional contact us at 604-709-5955, visit your local branch or find an investment professional in your neighborhood.