How a RRIF works
A RRIF is the payout stage of an RRSP. You set one up with a financial institution and move RRSP money into it by direct transfer, which triggers no tax and no withholding. The investments can stay the same, and they keep growing without tax inside the plan. What changes is the direction of the money: once the RRIF exists, no more contributions are allowed, and from the following year you must withdraw at least a minimum amount every year.
You must deal with your RRSP by December 31 of the year you turn 71, but you can open a RRIF at any earlier age, for example to start retirement income at 65. You can hold more than one RRIF, and self-directed RRIFs are allowed. You can always take more than the minimum, but never less.
Every dollar withdrawn is taxable income in the year you receive it. That makes a RRIF the Canadian counterpart of a US IRA once required minimum distributions begin, with two practical differences: the Canadian minimum starts sooner, in the year you turn 72 at the latest rather than at 73 or 75, and it takes a larger share of the balance. At 80, for example, a RRIF minimum is 6.82% of the balance, while a US IRA owner divides by 20.2, which works out to about 4.95%.
How the RRIF minimum withdrawal is calculated
Your carrier works out the minimum each year. It is the RRIF’s fair market value at the start of the year multiplied by a prescribed factor for your age on January 1. Up to age 70 the factor is 1 ÷ (90 − age), which gives 4.00% at 65 and 5.00% at 70. From 71 it follows a fixed chart that climbs from 5.28% to 20.00% at 95 and older, so the required share keeps rising as the balance shrinks.
Three details change the number. There is no minimum in the calendar year the RRIF is set up, so someone who converts at 71 takes the first required withdrawal in the year they turn 72, at the age-71 factor of 5.28%, because they are 71 on January 1. When you open the RRIF you can elect to base the minimum on the age of your spouse or common-law partner instead; a younger spouse’s age means a lower factor for as long as the fund lasts. And the minimum is fixed from the January 1 value: a market fall later in the year doesn’t reduce it, so you may be selling after a drop, one face of sequence-of-returns risk.
How RRIF withdrawals are taxed
RRIF payments are added to your income and taxed at your combined federal and provincial marginal rate. Withholding depends on the amount. The minimum isn’t treated as a lump sum, so carriers generally pay it with no tax withheld unless you ask them to. Anything above the minimum is withheld at the lump-sum rates, which outside Quebec are 10% on amounts up to $5,000, 20% on amounts over $5,000 up to $15,000, and 30% above $15,000. Either way the real bill is settled on your return, and a retiree who takes only the minimum can owe a balance when filing.
Rules tied to age 65 and to Old Age Security also shape the tax:
- Pension income amount: from 65, RRIF payments qualify for a federal credit on up to $2,000 a year of eligible pension income.
- Pension income splitting: from 65, you can allocate up to 50% of eligible RRIF income to a spouse or common-law partner’s return.
- OAS recovery tax: every RRIF dollar raises net income, and 2026 net income above $95,323 costs 15% of the excess in Old Age Security from July 2027 to June 2028.
- Before 65, RRIF income qualifies for the credit and for splitting only when it is received because a spouse or common-law partner died.
RRIF vs. annuity vs. cashing out
In the year you turn 71, an RRSP has three possible exits, and the choice shapes the rest of your retirement income. A RRIF keeps you in control of the investments and the pace of withdrawals. An annuity bought with RRSP money trades that control for payments that can be guaranteed for life. Withdrawing the whole plan as cash is rarely efficient, because the entire balance becomes income in a single year and much of it can land in the top brackets. The trade-offs look like this:
- RRIF: stays invested and flexible above the minimum, and what is left passes to your heirs, but a long life or poor returns can run it down.
- Annuity: steady income that addresses longevity risk, but little or no access to the capital once bought, and income that is usually fixed in dollars.
- Cash: 30% withholding outside Quebec on a balance over $15,000, and the whole balance taxed at once, often at the top marginal rate.
Planning withdrawals from a RRIF
Because every RRIF dollar is taxable and the minimum rises with age, when you draw the money matters as much as how much. One approach is to withdraw more than the minimum, or to open the RRIF early, in the lower-income years between retiring and starting CPP and Old Age Security. That fills lower brackets now and shrinks later minimums that could push income over the OAS recovery threshold. The trade-off is paying some tax sooner and losing tax-deferred growth on the money withdrawn.
A RRIF is often drawn alongside a TFSA: the RRIF supplies taxable income up to a chosen level, and the TFSA tops up spending without adding to income. Someone with no workplace pension may also open a small RRIF at 65 to use the $2,000 pension income amount each year. Comparing these orders over a whole retirement, rather than one year at a time, is the job of a tax-efficient withdrawal strategy, because each choice changes later minimums, OAS and the tax owed at death.
Illustrative numbers
A $600,000 RRIF in the year its owner turns 72
- RRIF value on January 1
- Fair market value of everything in the RRIF at the start of the year
- Prescribed factor under 71
- 1 ÷ (90 − age), for example 4.00% at 65
- Prescribed factor at 71 and older
- Set by the CRA chart: 5.28% at 71, rising to 20.00% at 95 and older
- Age
- Your age on January 1, or your spouse’s or common-law partner’s if you elected that when opening the RRIF
No minimum applies in the calendar year the RRIF is set up.
RRIF value on January 1$600,000
Owner’s age on January 171
Minimum at the age-71 factor of 5.28%$31,680
Spouse’s age on January 1, if elected at setup66
Factor at 66: 1 ÷ (90 − 66)4.17%
Minimum using the spouse’s age: $600,000 ÷ 24$25,000
Electing the younger spouse’s age cuts this year’s required withdrawal by $6,680 and keeps more money sheltered. The election only lowers the floor: the owner can still take more whenever spending or tax planning calls for it.
At a glance
RRIF minimum withdrawal factors by age on January 1 (RRIFs set up after 1992)
| Age at start of year | Minimum factor | Minimum on a $100,000 RRIF |
|---|---|---|
| 60 | 3.33% | $3,333 |
| 65 | 4.00% | $4,000 |
| 70 | 5.00% | $5,000 |
| 71 | 5.28% | $5,280 |
| 72 | 5.40% | $5,400 |
| 75 | 5.82% | $5,820 |
| 80 | 6.82% | $6,820 |
| 85 | 8.51% | $8,510 |
| 90 | 11.92% | $11,920 |
| 95 or older | 20.00% | $20,000 |
Put it in your plan
RRIF in MoneyWhatIf
MoneyWhatIf models a RRIF as the payout stage of an RRSP. With Canada chosen under Household, the account pays at least its RRIF minimum each year from 72, and every withdrawal is taxed on its owner’s own return, because each person is calculated separately. The Old Age Security recovery tax is charged on the whole year’s income, withdrawals included, so you can see when larger RRIF withdrawals start costing OAS. Pension income splitting and the age amount are not modeled.
Common questions
RRIF FAQs
When do I have to convert my RRSP to a RRIF?
By December 31 of the year you turn 71, your RRSP must be transferred to a RRIF, used to buy an annuity, or withdrawn as taxable cash. Because there is no minimum in the year a RRIF is set up, converting at 71 means your first required withdrawal falls in the year you turn 72. You can also convert earlier, at any age, if you want income sooner.
Why was no tax withheld from my RRIF payment?
The minimum amount isn’t a lump-sum payment for withholding purposes, so carriers generally don’t withhold tax from it unless you request it. The income is still taxable. If the minimum, plus CPP, OAS and any pension, puts you in a higher bracket, you can owe a balance at tax time. Asking the carrier to withhold a set percentage spreads the cost over the year.
Can I put my RRIF withdrawal into a TFSA?
Yes, if you have unused TFSA room. The RRIF payment is taxed as income first, like any withdrawal, and the money left can then be contributed to a TFSA, where later growth and withdrawals are tax-free. There is no way to move RRIF money into a TFSA without it counting as income. For a retiree who doesn’t need the whole minimum, this keeps the money invested and keeps its future growth off later tax returns.
What happens to a RRIF when you die?
A surviving spouse or common-law partner, and in some cases a financially dependent child or grandchild, can transfer the RRIF money to their own RRSP, RRIF or an eligible annuity without immediate tax. Otherwise the value is generally included in the deceased’s income for the year of death, where a large balance can be taxed at top rates. Keeping each beneficiary designation current is part of planning for this.