Registered retirement income fund (RRIF)

What is a RRIF?

A registered retirement income fund (RRIF) is a great way to use your RRSP savings to generate retirement income while continuing to have taxes deferred on your investment growth. It’s 1 of the 3 choices you have when you’re required to move your money out of your RRSP by December 31 of the year in which you turn 71.

In many ways, a RRIF works like an RRSP in reverse: Instead of putting money in, you take an income out. You do have to make a minimum withdrawal every year. What’s more, a RRIF keeps you in control of how your money is invested, letting you choose from:

• Insurance GICs
• Guaranteed investment certificates (GICs)
• Mutual funds
• Segregated fund contracts
• Other options that reflect your risk tolerance and your overall financial plan

Often you can keep your current investments and transfer them to your new RRIF.

How a RRIF can fit into your financial plan:

• You control your investments. Your money can be invested in many ways, so it keeps growing and working for you.
• You control your income. There is a minimum withdrawal requirement, and depending on your investments, you may take additional withdrawals. However, you do need to be careful, because extra withdrawals can quickly shrink your capital, and reduce your future income and lead to tax implications.
• You maximize tax deferral. Since income is taxed only when it's taken out of the plan, the tax-deferral you enjoyed with your RRSP continues with your RRIF.
• It can be passed to your spouse tax free. RRIF assets can be passed directly to your spouse on your death, without being taxed.