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RRIF 101: What Is It and How Does it Work?


A Registered Retirement Income Fund (RRIF) is your way to a safer retirement. It is an account registered with the government to help you receive a steady income in your late 60s. It is an extension of the Registered Retirement Savings Plan (RRSP) since you cannot contribute towards the latter as soon as you turn 71. There are many perks of having an RRIF account, two of them being tax-free savings and complete control of your golden years.

Although RRSPs are great for your retirement savings, they have an expiration date. The law states that before you turn 71, you must convert an RRSP account into some form of income to continue saving. Converting an RRSP account to cash could incur a huge tax; thus, instead of purchasing an annuity or cashing it, you could maximize your savings by transferring it to a registered retirement income fund or an RRIF.

What do we know about RRIFs?

Since you open an RRIF account to pay for your retirement, you should pull out a part of your total balance each year. The minimum withdrawal sum is determined as per the level of your account’s worth towards the start of the year. The rate is also dependent on your age. As such, younger applicants have a lower withdrawal limit.

We also know that your withdrawal limit isn’t liable to retaining taxes; however, it should be considered as your income for the year in which it was withdrawn. This is critical as you might need to pay an annual tax on the amount you withdrew, which is also dependent upon other circumstances. Far beyond the yearly withdrawal limits, the institution looking after your RRIF is needed to gather withholding tax when you make a withdrawal.

How to open an RRIF account?

The process is simple:

1. Visit your nearest financial institution (an insurance company, trust company, or bank)

2. Fill out the application form

3. Choose a payment schedule

If you considered other saving schemes, here’s why RRIF is still better:

LIF or Life Income Fund resembles a RRIF, but it is for secured retirement plans. A LIF is utilized to oversee savings that started from an employer annuity plan. Since the assets in a LIF are ‘secured’, there is both a minimum and maximum withdrawal limit for every year. Other than that, they work a lot like RRIFs.


How you deal with your RRIF will rely on many factors such as marital status, age at the time of retirement, your other retirement pay sources like an employer annuity, government perks, or even an expected inheritance. With so many things to consider, it is crucial to have a strong establishment from where to begin.

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