|
RIF Basics
By December 31st of your 71st birthday year, Canadian law requires that you convert your RSPs to a RIF – an investment plan that establishes a retirement income stream.
What is a Registered Retirement Income Fund (RIF)?
- A Registered Retirement Income Fund (RIF) is an
investment plan – one of the most flexible investment vehicles for your
retirement. A RIF is a vehicle for tax deferral that works in similar fashion
to an RSP – except now, instead of making annual contributions, you receive
income in your retirement years
- Your minimum RIF withdrawal each year
is calculated on a percentage (depending on your age) of the plan’s
total value on January 1st each year. You can withdraw a larger sum at
any time
- While you can convert your RSP savings into a
retirement income option at any time before you reach age 71, it is mandatory
that you convert all your RSPs by December 31st in the year you turn age 71
- You may not make new tax-deductible contributions to an RIF
Benefits of a RIF
- Control how
your money is invested
- Investment growth is tax-sheltered until the money is withdrawn, at
which point it is taxed as income
- Maximize tax deferral opportunities
Learn
about flexible RIF investment options
How to calculate RIF Payments
- With an RIF, you decide how much money you want to
receive as income, subject to a legislated minimum income payment
- Your annual minimum payment is based on your age on
January 1st, and is calculated as a percentage of your RIF value at the
beginning of each year. More information
About Locked-In Plans
If you have a
Locked-In RSP (LRSP) or Locked-in Retirement Account (LIRA), or your company
provides locked-in funds as part of your pension payout, you have the option of
converting these savings to a Life Income Fund (LIF), Locked-In Retirement Income Fund
(LRIF), or Prescribed Retirement Income Fund (PRIF), depending on the legislation
that governed the pension plan. Learn
more about Locked-in Plans.
| 
