Registered Retirement Income Fund
A RRIF is a Registered Retirement Income Fund. It is one of the best options you have when your RRSP matures. RRSPs can be transferred tax-free to a RRIF any time .A RRIF lets you shelter investment income in the same way that an RRSP does and you only pay tax on the money you withdraw. Unlike an RRSP however, you must withdraw a minimum RRIF payment each year, the amount of which is set by the federal government.
You don't have to take a payment from a RRIF in the calendar year it is first funded. In subsequent years, however, the minimum annual payment increases based on your age and the value of your RRIF at the beginning of each year. The Plan Administrator will provide you with this minimum each year while the balance of your RRIF continues to earn interest.
You may choose to have minimum payments based on your spouse's age. This is a choice you make when the RRIF is created. It gives you several possible benefits: if your spouse is younger, the minimum payment will be lower; much lower when your spouse is younger than 71. If your spouse is older, the minimum payment will be higher. If you didn't make this choice when you applied for your RRIF, or if you marry later, you can transfer your RRIF funds to a new one based on your younger spouse's age.
The 2007 Federal Budget raised the age limit for converting an RRSP to RRIF from 69 to 71, however, you can start a RRIF at anytime.
RRIFs offer simplicity in estate planning. On your death, your spouse or partner can continue to receive income from your RRIF. Alternatively, the RRIF can be transferred tax-free to your spouse's RRIF or RRSP. For more information on RRIFs visit Revenue Canada's site:
