RRIFs

 

Description

A Registered Retirement Income Fund (RRIF) is one of the tax-deferral vehicles available to Registered Retirement Savings Plan (RRSP) holders who wish to continue the tax sheltering of their plans.

An RRIF is designed to pay out a specified amount every year and is intended to distribute the assets accumulated in an RRSP and provide a steady flow of income to the investor. The investor retains control over all investment decisions.

An RRIF is set up through a transfer from an RRSP. This can be done at any time, but must be done before the end of the year that the investor turns 71, when the RRSP must be terminated.

RRIF Income Withdrawal

In the first calendar year of an RRIF’s existence there is no minimum amount that must be withdrawn.  In subsequent years a minimum amount must be withdrawn. This amount differs and must be calculated at the beginning of each year. Withdrawals will be subject to withholding taxes in addition to normal income taxes.

Investors may withdraw more than the required minimum amount. A T4RIF is issued indicating how much was withdrawn and the amount of taxes withheld.

Contact us today regarding your RRIF needs.

Calculating the Minimum Withdrawal Amount

There are two methods to calculate the minimum amount depending on whether the RRIF is a qualifying one or not.

Method 1: Qualifying RRIFs

A qualifying RRIF is one that was set up prior to 1993 and has had no deposits after 1992.   The required minimum withdrawal amount depends on the age of the annuitant:

Annuitant’s Age     Formula
Less than 78 –
Greater than or equal to 79 –
RRIF value on January 1st/ (90 – Age)
Percentage (see table)


Method 2: Non-Qualifying RRIFs

A non-qualifying RRIF is one that was set up after 1993.  The required minimum withdrawal amount depends on the age of the annuitant

Annuitant’s Age     Formula
Less than 71 –
Greater than or equal to 71 –
RRIF value on January 1st/ (90 – Age)
Percentage (see table)


Percentage withdrawals

Age at Start of Year % Formula
71 5.28%
72 5.40%
73 5.53%
74 5.67%
75 5.82%
76 5.98%
77 6.17%
78 6.36%
79 6.58%
80 6.82%
81 7.08%
82 7.38%
83 7.71%
84 8.08%
85 8.51%
86 8.99%
87 9.55%
88 10.21%
89 10.99%
90 11.92%
91 13.06%
92 14.49%
93 16.34%
94 18.79%