Registered Retirement Income Fund (RRIF)
What is a RRIF?
In a way it is the second stage of your retirement planning strategy.
A RRIF operates in a similar fashion to an RRSP; it allows you to control how your money is invested. You can continue to grow your investments tax-sheltered until the money is withdrawn (at which point it is taxed as income), and you continue to maximize tax deferral opportunities. Most RRIFs are established on the transfer of RRSP assets. While you can convert your RRSP assets into a retirement income option any time before you reach age 71, you have to convert all your RRSP assets before December 31 in the year you turn 71.
You have been saving your money inside an RRSP while growing tax-free - but you can't keep it there forever. You will be required to start withdrawing this money by the end of the year you turn 71. Now is the time to harvest what you have been sowing during your hard working years. You want to start enjoying that money during your retirement. The way to do this, is to move your money out of your RRSP to a RRIF, when you are ready to start spending it, or because you have to, as indicated above.
The RRIF you purchase for this stage of retirement planning could be a very important decision, because this will represent a large amount of money that will have to provide you a comfortable retirement. Let us help you in exploring your choices.
Many choices are available for investing your RRSP money into a RRIF.
Guaranteed investment, like GICs
Mutual funds or segregated funds
Other options that reflect your risk tolerance and your overall financial plan
Also you can keep your current investments ( in your RRSP) and move them to a RRIF.
You must withdraw a minimum amount each year starting the year after you establish the RRIF (all amounts withdrawn from an RRIF should be included in your taxable income when filing your annual return).
There is nothing to stop you from taking more than the minimum. However, if you do, any excess will be subject to withholding tax at source. The withholding tax will be taken into account when calculating your tax payable when filing your annual return.
