RRIF Complete Guide

RRSP to RRIF Conversion

Deadline

• Must convert by Dec 31 of year you turn 71
• Can convert earlier if desired
• No minimum age to convert

Conversion Process

• Transfer directly to RRIF
• No tax on conversion
• Investments can transfer in-kind
• Same financial institution or transfer out

Alternatives to RRIF

• Life annuity
• Combination of RRIF and annuity
• Cash out (significant tax hit)

Minimum Withdrawal Rates

2024 Minimum Percentages

How Minimum Is Calculated

• Based on January 1 account value
• Multiply by percentage for your age
• Can use spouse's age (if younger)
• Election must be made at RRIF setup

Tax Treatment

Withdrawals Are Taxable

• 100% of withdrawals are income
• No withholding on minimum amount
• Withholding on excess (10-30%)
• Added to your taxable income

Withholding Tax Rates

Quebec rates differ. Minimum withdrawal has no withholding.

Pension Income Amount

Age 65+

• RRIF income qualifies for pension income amount
• Up to $2,000 credit
• Worth up to ~$300 federal + provincial
• Also qualifies for pension splitting

Under Age 65

• RRIF income does NOT qualify
• Unless from qualified pension
• No pension income splitting

Income Splitting

How It Works

• Transfer up to 50% to spouse's return
• Both must be 65+ (for RRIF)
• Election made on return
• Form T1032

Benefits

• Reduce higher earner's tax bracket
• Minimize OAS clawback
• Both can claim pension income amount

RRIF Planning Strategies

Withdraw More Than Minimum

Consider withdrawing extra when:

• Low income year (before OAS)
• Below OAS clawback threshold
• To fund TFSA contributions
• To equalize income over retirement

RRSP Meltdown Before 71

• Withdraw from RRSP in 60s
• Convert to TFSA (after-tax)
• Reduces forced RRIF minimums
• Less income in 70s/80s

Multiple RRIFs

• Can have multiple RRIF accounts
• Each has its own minimum
• May simplify estate planning
• Consider consolidating for simplicity

Investment Considerations

In-Kind Withdrawals

• Can withdraw securities instead of cash
• FMV counts as withdrawal
• Security transfers to non-registered
• Useful for certain situations

Asset Allocation

• Consider withdrawal needs
• Keep some liquid investments
• Balance growth vs stability
• Plan for decades potentially

RRIF at Death

To Spouse

• Can transfer to spouse's RRSP/RRIF tax-free
• No immediate tax
• Spouse continues withdrawals
• Designate as beneficiary

To Others

• Full value included in final return
• Can be significant tax
• Financially dependent child/grandchild exceptions
• Estate planning important

Successor Annuitant

• Spouse becomes RRIF holder
• Continues receiving payments
• No probate on RRIF assets

Common Questions

Can I convert back to RRSP?

No. Once converted to RRIF, it cannot be converted back.

Can I skip a withdrawal?

No. Minimum withdrawal is mandatory each year.

What if I need more?

Withdraw any amount above minimum. Withholding tax applies on excess.

Do I need to withdraw in December of conversion year?

No minimum in year of conversion. First minimum due following year.

Reporting RRIF Income

T4RIF Slip

• Box 16: RRIF income
• Box 22: Tax withheld

Where to Report

• Line 11500: Other pensions (RRIF income)
• Line 31400: Pension income amount (age 65+)
• Form T1032: For pension splitting