If you live in Canada, you’ve spent years building up your Registered Retirement Savings Plan (RRSP), putting in the hard work to secure your future. Now that retirement is on the horizon, it’s time to make sure your savings work just as hard for you. One of the most common and flexible ways for Canadians to turn retirement savings into income is by converting your RRSP into a Registered Retirement Income Fund (RRIF).
What is a Registered Retirement Income Fund?
A Registered Retirement Income Fund (RRIF) is a lot like an annuity—it’s designed to pay out income to you or your chosen beneficiaries during retirement. Many people take the balance from their Registered Retirement Savings Plan (RRSP) and roll it into an RRIF to create a steady retirement income stream.
The money in your RRIF keeps growing tax-sheltered, just like it did in your RRSP. The difference is that you’re putting money in with an RRSP, while with an RRIF, you’re taking it out. When you withdraw from your RRIF, those payouts are considered taxable income and are taxed accordingly by the Canada Revenue Agency (CRA) in the year you receive them.
Think of a RRIF as the next step in your retirement plan—a way to keep your savings working for you while giving you access to the income you need. You’ll only pay tax on the money you withdraw, keeping your funds tax-efficient as they grow.
How does an RRIF account work?
Canadian tax rules mandate that you turn your RRSP into a retirement income option by the conclusion of the year in which you reach the age of 71. So, what happens to your RRSP savings?
You’ve got a couple of options: You can withdraw everything in one go (and likely face a hefty tax bill), or you can set yourself up for regular withdrawals by transferring the funds into something like an RRIF. Spreading out the withdrawals over time typically means paying less income tax overall.
If you go with an RRIF, your savings can keep growing tax-sheltered while you draw from them as needed. Plus, an RRIF gives you plenty of investment options—stocks, segregated funds, mutual fund investments, Exchange Traded Funds (ETFs), Guaranteed Investment Certificates (GICs), and more—so your money can continue working for you. Just keep in mind that you may need more than one RRIF account if you want to invest in different types of products.
RRIF withdrawal rules
Once your RRIF is set up, you need to withdraw a minimum amount each year. Your minimum annual withdrawal amount is based on your age (or your spouse or common-law partner’s age) and the account’s value at the start of the year. These minimum withdrawals kick in the year after you open your RRIF and continue until the account is empty.
Here’s a chart to help you visualize it:
| Age | Minimum withdrawal |
| 65 | 4.00% |
| 66 | 4.17% |
| 67 | 4.35% |
| 68 | 4.55% |
| 69 | 4.76% |
| 70 | 5.00% |
| 71 | 5.28% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.67% |
| 75 | 5.82% |
| 76 | 5.98% |
| 77 | 6.17% |
| 77 | 6.36% |
| 79 | 6.58% |
| 80 | 6.82% |
| 81 | 7.08% |
| 82 | 7.38% |
| 83 | 7.71% |
| 84 | 8.08% |
| 85 | 8.51% |
| 86 | 8.99% |
| 87 | 9.55% |
| 88 | 10.21% |
| 89 | 10.99% |
| 90 | 11.92% |
| 91 | 13.06% |
| 92 | 14.49% |
| 93 | 16.34% |
| 94 | 18.79% |
| 95 and older | 20.00% |
So, for example, let’s say your RRIF is worth $500,000 on January 1, 2025, and you’re 72 years old. The minimum RRIF withdrawal rate of 5.40% means you’ll need to withdraw at least $27,000 for 2025. If you were 82 (7.38%) on January 1, 2025, you would need to withdraw $36,900 for 2025.
The good news is that there’s no maximum limit for regular RRIFs (not locked-in ones like a locked-in retirement income fund (LRIF) or life income fund (LIF)), so you can take out as much as you need beyond the minimum. You also have the flexibility to choose how often you want to withdraw from your RRIF—monthly, quarterly, semi-annually, or annually. Plus, there’s no minimum withdrawal required in the first year you set up your RRIF, giving you some extra flexibility to plan your income.
Benefits of converting an RRSP into an RRIF
Opening an RRIF can be a smart move for your retirement planning. Sure, you could convert your RRSP into an annuity, or you could withdraw directly from your RRSP (though that would count as taxable income). But transferring your RRSPs into an RRIF offers some great benefits that make it a popular choice for managing your retirement savings, such as:
Savings continue to grow tax-free
When you convert your RRSP to an RRIF, you won’t pay any tax on your investment earnings right away. Your money keeps growing tax-free as long as it stays in the RRIF, and you’ll only pay tax on the withdrawals you take. It’s a great way to keep your savings working for you while managing your tax bill.
Flexibility for withdrawals
With an RRIF, there’s a minimum amount you’re required to withdraw each year, but no maximum—you’re in control. You can choose to make withdrawals monthly, quarterly, semi-annually, or annually, and if your needs change, you can adjust the amount and frequency anytime. Plus, you can even take a lump-sum withdrawal if you need some extra cash. Ultimately, it’s up to you how much you withdraw each year, as long as you meet the minimum requirement.
Spouses can play a role
If your spouse or common-law partner is younger than you, you can use their age to calculate the minimum amount you need to withdraw from your RRIF each year. A younger age means a lower minimum withdrawal and, in turn, less income tax on those withdrawals. This can be a smart strategy if you have other sources of income and want to keep as much money as possible growing in your RRIF for longer.
Where can you open an RRIF?
You can open an RRIF through a variety of financial institutions, such as:
- Banks
- Credit unions
- Trust companies
- Mutual fund companies
- Insurance companies
- Investment firms
Ready to convert your RRSP savings into an RRIF?
To learn more about Oaken RIFs, book an appointment for an in-person chat or call us at 1-855-OAKEN-22 (625-3622). You can even apply online today in as little as five minutes.