RRIF Questions & Answers
When can I start to receive income from my RRIF?
There is no longer a minimum age for purchasing a RRIF, so you can purchase it as you need retirement income. But, you must convert your RRSP investments into some form of retirement income before the end of the calendar year in which you turn 71. You can make a contribution to your RRSP for that year as long as you contribute by December 31.
Is retirement income taxable?
There are no tax consequences when you transfer your funds from an RRSP to a RRIF. The payments you receive from your RRIF are taxable at the same rates as RRSP withdrawals. But, since the income is spread over your retirement years, so are the taxes. If you are over age 65, your retirement income qualifies for the Pension Income Credit, which can lead to tax savings.
How do I choose my payment level?
You must take some taxable payments from the RRIF each year, except the year that you first open your RRIF. You can choose any payment level, as long as the total each year is at least equal to the mandatory minimum amount.
The minimum amount changes annually and is calculated through a government formula based on your age (or your spouse's age, if you so choose) and the total value of the RRIF at the beginning of the year.
There is no maximum payment level. With many RRIFs you can vary your payments up or down from year to year (as long the minimum withdrawal is maintained). Obviously the larger the payments you take out, the sooner your funds will be depleted.
Can I choose to base my RRIF on my spouse's birthdate?
You can choose to base your RRIF on your birthdate or your spouse's/common-law partner's birthdate.
If your spouse is younger, especially if younger than 71, your minimum payments will be much lower
If you select the age of the older spouse, your minimum payment will be higher without triggering withholding tax at source
If both RRIFs are based on the same birth date, when one spouse passes away the survivor can combine two or more RRIFs into one, rather than having to continue with separate RRIFs
If you didn't make this choice when you applied for your RRIF, or if you marry or enter into a common-law partnership later, you can transfer your RRIF to a new RRIF based on your spouse's age.