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What is a Registered Retirement Income Fund (RRIF)
A registered retirement income fund (RRIF) is an investment account that is used to convert the savings you have in your RRSP into an income. Typically this means moving your investments, cash etc. from your RRSP into the RRIF and starting regular withdrawals. The schedule of payments to you can be arranged to meet your needs (monthly, quarterly, annual).
- You are required to withdraw an annual minimum amount starting in the year which follows your 71st birthday.
- You may, at any time, withdraw any amount over the minimum.
- All withdrawals are considered taxable income in the calendar year of the withdrawal (earnings inside a RRIF are tax-free until they are paid out).
- Within certain limits you have some control over the taxes withheld from your payments (source deductions).
- You will be provided with a T4RIF at tax time that records your taxable income for the year.
- The minimum amount that must be paid to you for the upcoming year is calculated each December 31st.
- You can have more than one RRIF.
- The rules that apply to investing inside the RRIF are generally the same as those for RRSPs.
How is the minimum income (withdrawal) determined?
Prior to age 71 the formula for the minimum withdrawal from a RRIF is : 1 / (90 - age) X Account Balance.
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 December 31st some time in the following calendar year. If you had $100,000 in the RRIF, you would need to take out at least $4000 the following year. After age 71, the minimum income changes and no longer follows the formula 1/(90-age) formula. At that point the the minimum income amount is predetermined by the government. You can see from the table below that as you get older, the minimum percentage increases.
| Age | Percentage |
| 65 | 4.00% |
| 66 | 4.17% |
| 67 | 4.35% |
| 68 | 4.55% |
| 69 | 4.76% |
| 70 | 5.00% |
| 71 | 5.28% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.67% |
| 75 | 5.82% |
| 76 | 5.98% |
| 77 | 6.17% |
| 78 | 6.36% |
| 79 | 6.58% |
| 80 | 6.82% |
| 81 | 7.08% |
| 82 | 7.38% |
| 83 | 7.71% |
| 84 | 8.08% |
| 85 | 8.51% |
| 86 | 8.99% |
| 87 | 9.55% |
| 88 | 10.21% |
| 89 | 10.99% |
| 90 | 11.92% |
| 91 | 13.06% |
| 92 | 14.49% |
| 93 | 16.34% |
| 94 | 18.79% |
| 95+ | 20.00% |
Do I have other Options?
Yes, you can collapse the entire account, remembering that the whole amount becomes taxable income in the year of the withdrawal or you can use the funds to purchase an annuity.
LINKS | CONTACT Darryl Craig, MBA Financial Advisor (604) 489-0727 #4 - 4313 Alberta Ave. Powell River, BC V8A 2M3
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