A Registered Retirement Income Fund (RRIF) is essentially an extension of your Registered Retirement Savings Plan. The goal of an RRSP is to save for your retirement, while a RRIF is used to withdraw funds at your retirement. They are both tax sheltered and government regulated.
An RRSP account is required to be converted into a RRIF account on December 31 of the year the account holder turns 71 years old. The option is also available to convert into a RRIF account any time before age 71.
Once the account is in RRIF standing, the Canada Revenue Agency (CRA) requires the account holder to withdraw minimum amounts out of the account annually. The amount that must be withdrawn is determined by a calculation that utilizes the account holder’s age and market value of the assets within the account as of December 31 of the previous year. The money taken out will be considered as taxable income and should be taxed accordingly.
> To learn more details about RRIFs, contact a Torce Financial representative.