A RRIF is an investment plan, established in accordance with Government of Canada requirements, into which you can transfer registered funds (usually your RRSP) without tax liability to establish a source of retirement income.
Some RRIFs are similar to continuing an RRSP beyond age 71, with the exception that you must take some taxable income from the RRIF. You can choose any payment level, as long as the total each year is at least equal to the minimum annual amount. There is no maximum payment level.
With many RRIFs you can vary your annual payments above the minimum amount to meet your needs. Obviously the higher the payments, the sooner your funds will be depleted. RRIFs can continue for the lifetime of the holder.
You don’t have to take any payment from a RRIF in the calendar year it is first funded. In subsequent years, the minimum annual payment changes annually, based on your age and the total value of the RRIF at the beginning of the year.
In some cases, it makes sense to elect to base your minimum RRIF payment on your spouse’s birthdate. You must make this election when the RRIF is created:
1Spouse includes a common-law or same-sex partner.
If your age (or your spouse’s age if you have elected) is less than 71 at the beginning of the year, the minimum payment is calculated by subtracting the age at that time from 90, and dividing the result into the value of the RRIF at the beginning of the year. This formula produces an increased payment each year.
If the age at the beginning of the year is from 71 to 77, the minimum payment depends on whether the RRIF was first funded before or after January 1, 1993.
The percentages in the first column below apply to RRIFs first funded before January 1, 1993, and to which:
The second column applies to RRIFs first funded after January 1, 1993, or a previous RRIF that receives funds from either of the above sources after that date.
All calculations are based on the total value of the RRIF at the beginning of the year.
Age |
All RRIFs 2015+ |
Pre-1993 RRIFs – Prior to 2015 |
Post-1992 RRIFs – Prior to 2015 |
|---|---|---|---|
| 71 | 5.28 % | 5.26 % | 7.38 % |
| 72 | 5.40 % | 5.56 % | 7.48 % |
| 73 | 5.53 % | 5.88 % | 7.59 % |
| 74 | 5.67 % | 6.25 % | 7.71 % |
| 75 | 5.82 % | 6.67 % | 7.85 % |
| 76 | 5.98 % | 7.14 % | 7.99 % |
| 77 | 6.17 % | 7.69 % | 8.15 % |
From age 78 on, the following percentages are applied to the value of all RRIFs at the beginning of the year, based on the age at that time:
Age |
Percentage |
Age |
Percentage |
|---|---|---|---|
| 78 | 6.36 % | 87 | 11.33 % |
| 79 | 6.58 % | 88 | 10.21 % |
| 80 | 6.82 % | 89 | 10.99 % |
| 81 | 7.08 % | 90 | 11.92 % |
| 82 | 7.38 % | 91 | 13.06 % |
| 83 | 7.71 % | 92 | 14.49 % |
| 84 | 8.08 % | 93 | 16.34 % |
| 85 | 8.51 % | 94 | 18.79 % |
| 86 | 9.99 % | 95 or older | 20.00 % |
Income tax may be deducted from RRIF payments. The withholding tax only applies to the portion of a RRIF payment in excess of the annual minimum. However, it applies to the full amount of any payments taken in the same calendar year your RRIF is opened.
RRIF Withholding Tax Table
| Withdrawal | Tax rate** |
| Up to $5,000 | 10.00 % |
| $5,000 to $15,000 | 20.00 % |
| Over $15,000 | 30.00 % |
* Source – CRA Tax Bulletin
** Applies to all provinces except Quebec.
At your request, your RRIF provider can withhold more tax than the minimum required. This can be a convenient way of ensuring that sufficient tax is being deducted at source to fend off quarterly income tax installment payments.
RRIFs also offer simplicity in estate planning. If you die, your spouse or partner can continue to receive income from your RRIF or the account can be transferred tax-free to their RRIF or RRSP. Or, the remaining balance can be paid to your estate or beneficiary.
Like RRSPs, RRIFs come in all shape and sizes. Because they can be customized to meet your retirement income needs, your first step should be to contact our office for more information.
WHAT OUR CLIENT ARE SAYING…
“My wife and I have known Bill for over 10 years, working with him in various settings from investments to taxes to even charity planning. It is good to know that Bill has such a great reputation in the community and a heart for serving and helping others. He is sensitive to our particular needs and is a good teacher in helping us to understand a holistic picture of how to handle our finances. We wholeheartedly recommend Bill Thompson for your financial needs, you won’t regret it.”
“It has been an absolute pleasure to work with Bill regarding my short and long term goals. He really got to know me and tailored an overall solution that not only helped me save for retirement, but also to have plenty of cashflow for daily life. Following Bill’s advice has truly given me peace of mind.”
“The smartest move we have ever made financially was signing on with Bill Thompson. The value he provides is not limited to his extensive financial knowledge, but also the passion and the care he shows his clients. You could say that Bill lives and breathes “know your client”, getting to know his clients and tailoring strategies to help them get to where they want to go. It’s been 15 years and we can’t wait to work with Bill for the next 15.”
“Bill is our ‘go-to’ person when it comes to valuable financial advice. We started with very little in our savings, but after 3 years of listening to Bill and being prudent with our money, we have been able to build a tidy amount that just keeps on growing. Can’t say enough good things about him, meet with Bill right away!”
