A Registered Retirement Income Fund (RRIF) is a Canadian account that provides income in retirement. It is created by converting savings from an RRSP into a RRIF, which then pays out mandatory withdrawals each year.
How It Works
By the end of the year you turn 71, you must convert your RRSP into a RRIF or another retirement income option. Once set up, the RRIF requires you to withdraw a minimum percentage each year, based on your age. Withdrawals are taxable as income.
Benefits
- Continued tax deferral: Investments inside the RRIF continue to grow tax-deferred.
- Income flexibility: You can withdraw more than the minimum if needed.
- Retirement income: Provides a structured way to draw income during retirement.
Final Thoughts
An RRIF ensures retirement savings are gradually withdrawn and taxed. It is a required step after an RRSP, helping Canadians transition from saving to drawing income in retirement.