RRIFs

A Registered Retirement Income Fund (RRIF) is an account that you can use to generate income during your retirement. Like a Registered Retirement Savings Plan (RRSP), a RRIF is registered with the Canada Revenue Agency (CRA).

You can work with a registered investment advisor to decide what investments you would like to hold in your RRIF and if they suit your financial goals.

Opening a RRIF

If you choose to turn your RRSP into retirement income, you roll your savings into a RRIF in order to allow your investments to continue to grow without paying taxes on interest, capital gains, dividends, and other distributions.

A registered investment advisor can help you set up your RRIF account. Be sure to:

  • Ask questions about the different types of charges and fees related to the investments in your account.
  • Shop around to compare fees and other charges at other firms.

To open the account, you will need to provide the firm you are dealing with accurate information about your personal and financial circumstances. The Opening Your Retail Account Guide from the Investment Industry Regulatory Organization of Canada (IIROC) discusses the ins and outs of opening different accounts.

Contributing to a RRIF

The purpose of a RRIF is to supply you with a steady stream of retirement income. Therefore, you cannot contribute funds to a RRIF.

Withdrawing Funds

An advantage to using a RRIF is that your investment income from your RRSP will continue to grow tax-free until it is withdrawn.

You must take a minimum amount of money out of your RRIF each year. At the beginning of each year, the financial institution that administers your RRIF will calculate and inform you of the minimum amount you will need to withdraw.

Annual withdrawals from your RRIF are taxable, and will be added to your income for tax purposes.

Closing or Transferring a RRIF

You may decide that you want to move your investments into a life annuity because you want to have a guaranteed stream of income. You are generally locked in when you move the funds to an annuity.

If a RRIF holder passes away, the funds can go to a spouse, common-law partner, or dependent. The deceased’s RRIF funds can transfer to a number of different types of accounts, such as a spouse’s RRIF, an RRSP, a registered disability savings plan (RDSP), etc.

Questions About RRIFs

Your registered investment advisor can answer questions about your RRIF account, or you can visit the CRA website to find out more.