RRIF Basics

Your registered retirement savings plan (RRSP) matures when you turn 71 years of age. That means by December 31 of the year you turn 71, you must close out your RRSP.

You can withdraw the RRSP funds as a lump-sum payment or transfer them to an annuity, but most people choose to roll their RRSP into a registered retirement income fund (RRIF), an account type designed to pay regular income to its holder.

Get a Qtrade RRIF working for you.

What is a RRIF?

A RRIF is a registered, tax-deferred financial product, just like an RRSP. But while RRSPs are designed for retirement savings, RRIFs are designed to provide retirement income. The investments in your RRIF continue to grow tax-free and withdrawals are treated as income for tax purposes. After you have opened a RRIF, you can transfer cash and investments from RRSPs, pooled registered pension plans (PRPPs) and registered pension plans (RPPs). Withdrawals begin the year after you open your RRIF and have an annual minimum that increases every year. If you choose to, you can also withdraw more than the minimum amount.

What are the benefits of a RRIF account?

 

RRIFs tend to be the most popular option because of the independence and flexibility they allow.

  • You can carry on managing the same tax-sheltered investments that you had in your RRSP, including stocks, exchange-traded funds (ETFs), bonds, mutual funds, GICs, and cash.
  • The government requires you to make a minimum annual withdrawal, which increases as you age, but you can choose to withdraw a larger amount.

What can I invest in within a RRIF?

Stocks, ETFs and more

Just like RRSPs, you can also choose the investments that make up your RRIF.

  • You can buy and sell stocks, bonds, GICs, mutual funds, and exchange-traded funds (ETFs) in your RRIF.
  • There are some rules that apply, however, regarding the exact nature of the investments held in a RRIF.

Your assets must be invested in what the Canadian Government calls “qualified investments” or there could be tax implications and penalties. 

US stocks

Qtrade Direct Investing® also offers RRIFs in U.S. dollars.

  • There are several advantages to these, especially if you hold a lot of U.S. stocks.
  • Dividends are not subject to an automatic conversion into Canadian dollars (and the losses that come about with foreign exchange transactions).
  • Any sales of U.S. stocks can remain in U.S. funds until new U.S. stocks are bought, rather than being transferred into Canadian currency.

What is a self-directed RRIF?

 

If you are knowledgeable about markets and their various assets—and if you have had a self-directed RRSP in the past—a self-directed RRIF could make sense. 

  • It gives you full freedom (within the Canadian Government’s rules) to control your RRIF portfolio and manage the assets within it.
  • It allows you the flexibility to switch your investments at any time. It also permits you to respond quickly to any movements in the markets or changes to your personal needs.

Does Qtrade offer RRIFs?

Yes, Qtrade Direct Investing® offers RRIF accounts for self-directed investors. You can transfer your Qtrade RRSP account or RRSP assets from another provider into a Qtrade RRIF. 

Read all about RRIFs in our Guide to registered retirement income funds.

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  • There is no difference between a RIF and a RRIF. They are the same type of registered account. “RIF” is simply a short form of “RRIF”.

  • A life income fund (LIF) is similar to a RRIF in that it is designed to provide you with retirement income from your savings. The difference is the source of the savings. If you left a job where you contributed to a pension plan, you likely transferred those pension funds into a locked-in retirement savings plan (LRSP) or locked-in retirement account (LIRA). Like with RRSP accounts, LRSPs and LIRAs mature in the year you turn 71 and must be transferred to a LIF.

    The LIF payment minimums are the same as RRIF payment minimums, but the earliest you can open a LIF is usually at least early retirement age, which is specified in the pension legislation that governed your pension plan.

  • Yes, you can transfer your RRIF from one financial services provider to another. 

  • No. The only funds that can be deposited into a RRIF are those transferred from an RRSP (or PRPP, RPP, SPP or FHSA account). However, you can transfer in cash or assets from another RRIF account or transfer your RRIF account from one financial institution to another.

  • You can have more than one RRIF. However, once a RRIF is set up and your RRSP assets transferred, you cannot make contributions to that RRIF, regardless of your age. 

  • While you must close your RRSP during the year you turn 71, you can open a RRIF any time before then. One reason you might want to convert your RRSP savings to RRIF early is to help supplement your income with RRIF payments so you can defer beginning your Canada Pension Plan (CPP) and/or Old Age Security (OAS) payments. The longer you delay CPP and OAS payments (as late as age 70), the higher your benefit payments will be. Once a RRIF is set up and your RRSP assets transferred, you cannot make contributions to that RRIF. You can also open more than one RRIF.

  • The year after you open a RRIF, you must start withdrawing a minimum amount, which increases slightly every year. You can withdraw more than the minimum, but never less. If you withdraw more than the minimum, that amount cannot be put towards your withdrawal the following year. You will also pay withholding tax on the amount withdrawn above the minimum amount, based on a sliding scale of percentage amounts.

    You can elect to have your minimum amounts calculated using either your own age or the age of your younger spouse, if applicable. This would lower your minimum payments.

    The percentage of the withdrawal for any given year is based on the balance in your RRIF at the end of the previous year. From the age of 71 upwards, the minimum withdrawal amount is set by the Canadian Government (see table below). Before the age of 71, the minimum amount is calculated by dividing one by (90 minus your current age). For example, at age 55, your minimum RRIF withdrawal would be calculated as follows: 1 divided by (90 – 55 = 35) = 2.86%

    Age        Minimum withdrawal amount
    55                           2.86%
    60                           3.33%
    65                           4.00%
    70                           5.00%
    71                           5.28%
    75                           5.82%
    80                           6.82%
    85                           8.51%
    90                           11.92%
    90+                        20.00%

    A full list of minimum withdrawal amounts can be seen at the Government of Canada website.  

Aviso Wealth Inc. (“Aviso Wealth”) is the parent company of Credential Qtrade Securities Inc. Aviso Wealth is a wholly-owned subsidiary of Aviso Wealth Limited Partnership, which in turn is owned 50% by Desjardins Financial Holdings Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.

Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc., a wholly owned subsidiary of Aviso Wealth Inc. and Member of the Canadian Investor Protection Fund.

Northwest & Ethical Investments L.P (“NEI” or “NEI Investments”) is a subsidiary of Aviso Wealth; and NEI Funds are related issuers of Credential Qtrade Securities Inc.

This material is for informational purposes only. While this material has been compiled from sources believed to be reliable, Qtrade Investor does not guarantee the accuracy, completeness, timeliness or reliability of this information. Information, figures and charts are summarized for illustrative purposes only and are subject to change without notice. All investments are subject to risk, including the possible loss of principal.