Watts Advisors Accounting & Tax Blog

July 17, 2014 0 comments

What is a RRIF and How Does it Work?

A Registered Retirement income fund (commonly referred to as a RRIF) is an income fund created upon a transfer funds from an individual’s  Registered Retirement Savings Plan (RRSP), this fund has required annual withdrawals that are designed to use the equity built up in an individual’s RRSP’s to provide a steady income to that individual in retirement.

RRSPs are required to be converted to a RRIF by the end of the year that the owner turns 71.  Owners of RRIFs are then required to start making the minimum withdrawals the year after the RRIF has been established.

There can be some advantages to converting to a RRIF early.  Some individuals make the conversion at age 65 to take advantage of the pension income tax credit or for the purposes of income splitting with your spouse.

The percentage of a RRIF that the individual must withdraw annually is as follows:


Age at Start of the Year Minimum Withdrawal
65 4.00%
66 4.17%
67 4.35%
68 4.55%
69 4.76%
70 5.00%
71 7.38%
72 7.48%
73 7.59%
74 7.71%
75 7.85%
76 7.99%
77 8.15%
78 8.33%
79 8.53%
80 8.75%
81 8.99%
82 9.27%
83 9.58%
84 9.93%
85 10.33%
86 10.79%
87 11.33%
88 11.96%
89 12.71%
90 13.62%
91 14.73%
92 16.12%
93 17.92%
94+ 20.00%


*Note – This is for RRIF’s that were set up after 1992, different rules apply to pre 1992 RRIF’s

The most significant tax planning opportunity with RRIF’s relates to pension income splitting.  RRSP’s are not eligible for income splitting but RRIFs are eligible.  For couples who one spouse has significantly more income, or a significantly higher RRSP, conversion to a RRIF for the purposes of income splitting can be a very rewarding tool.

If you are looking for advise as to whether it would be advantages to convert to a RRIF early or want to ensure that you RRIF pension income splitting it being done to the greatest advantage please contact us at steve@wattsca.ca , 604 510-0156, or visit our website at https://wattsca.ca for more information.



Disclaimer: The information in the blog is for general information only and is not intended to be a substitute for professional advice.  Each person’s situation is unique, and a designated professional accountant can assist you in using the information on this blog to your best advantage.  The author of this blog strives, but does not guarantee, to provide information which is current and accurate.  Due to the nature of the information, it should not be relied upon for decision making without talking to a designated professional accountant.  By obtaining information from this blog, you fully release Watts Advisors Ltd., Chartered Accountants of any liability that may arise from using this information.

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