How Does a RRIF Work in Ontario?

A Registered Retirement Income Fund, or RRIF, is one of the main ways Canadians turn RRSP savings into retirement income. In Ontario, the tax rules are federal, but the planning decisions often affect the full household budget.

A RRIF keeps the money registered and invested while requiring annual taxable withdrawals after the year it is opened. For many Ottawa retirees, it offers more flexibility than buying an annuity with all RRSP savings at once.

What happens when an RRSP becomes a RRIF?

By the end of the year you turn 71, an RRSP generally has to be converted to a RRIF, used to buy an annuity, or withdrawn. Many people convert some or all of their RRSP to a RRIF so income can be paid gradually.

The RRIF can hold eligible investments depending on the provider. That may include GICs, mutual funds, segregated funds, or other approved investments. The income strategy should match the client's cash flow needs, risk tolerance, tax situation, and estate plans.

How is the RRIF minimum calculated?

There is no required minimum payment in the year the RRIF is established. Starting the next year, the minimum is calculated by multiplying the RRIF value at the start of the year by the prescribed RRIF factor.

For age 70 or younger, the factor is 1 divided by 90 minus age. For age 71 and older, CRA publishes prescribed factors for all other RRIFs. At age 71 the factor is 5.28%, and at age 95 or older it is 20%.

How is RRIF income taxed in Ontario?

RRIF withdrawals are taxable income. The minimum amount is generally paid without withholding tax, while amounts above the minimum usually have withholding tax deducted.

Withholding tax is not the final tax bill. The actual tax owing depends on total income for the year, including CPP, OAS, pensions, employment income, investment income, and other withdrawals. This is why RRIF planning is often reviewed alongside the full retirement income picture.

How is a RRIF different from a LIF?

A RRIF is generally used for regular registered retirement savings. A Life Income Fund, or LIF, is used for locked-in pension money. In Ontario, LIFs have both minimum and maximum withdrawal rules.

If money came from a pension plan or LIRA, it is important to confirm whether the correct income vehicle is a RRIF, LIF, annuity, or another option. Ontario locked-in rules can affect how much can be withdrawn each year.

GEP Insurance can help Ottawa and Ontario clients review RRIF income options and understand how they fit beside annuities, GICs, segregated funds, CPP, OAS, and pension income.

Ottawa And Ontario Examples

• An Ottawa family with work benefits, an older life policy, and mortgage insurance may need a plain-English review to see where the gaps are.
• A household that recently changed jobs, bought a home, or had children may need to update coverage even if policies are already in place.

Useful Next Pages

Frequently Asked Questions