What Is a RRIF and How Does It Work? A Plain-English Guide for Canadians Turning 71

Most of what I write here is aimed at people building their savings. This one is for the people who already built them.

If you're around 70, you've probably started hearing the word RRIF from your bank, your advisor, or your friends - usually with a bit of worry attached. "I have to convert my RRSP." "They're going to make me take money out." "Am I going to lose a big chunk to tax?"

My in-laws are getting close to 71, and when I wrote the post about moving RRSP money to your kids, it became clear the RRIF itself deserved its own explanation. It's not complicated once you see how it works, and there's nothing scary about it but my in-laws' advisor is definitely scaring them. There are just a handful of rules, a couple of choices you only get to make once, and one or two tax surprises worth knowing about ahead of time.

If you've read the RRSP post and the TFSA post, think of this as the last chapter of the RRSP story. And if you're younger than 70, this is a good one to send to your parents.

What Is a RRIF?

RRIF stands for Registered Retirement Income Fund.

The simplest way to think about it - an RRSP is for putting money in. A RRIF is for taking money out.

For your whole working life, your RRSP did one job - collect contributions and let them grow without tax. A RRIF is what your RRSP turns into when it's time to start living off that money. Same investments, same account number in many cases, same tax shelter. The only real difference is the direction the money moves.

A few things stay exactly the same:

• Your investments can stay as they are. The GICs, mutual funds, ETFs or stocks in your RRSP move into the RRIF as-is. Nothing has to be sold.
• The money keeps growing tax-free while it's inside the account.
• You only pay tax on what you take out, in the year you take it out.

And a few things change:

• You can't add new money. No more contributions.
• You have to take out a minimum amount every year. This is the big one, and I'll go through it in detail below.

That's really it. A RRIF isn't a new investment or a product someone is selling you. It's your RRSP, switched into withdrawal mode.

When Do You Have to Convert?

Your RRSP has to be closed by December 31 of the year you turn 71. Not your 71st birthday - the end of that calendar year.

For people reading this in 2026:

By that date, you have three options for your RRSP money:

1. Convert it to a RRIF. This is what almost everyone does.
2. Use it to buy an annuity - a guaranteed income for life (or a set number of years) from an insurance company.
3. Cash it out. The whole amount gets added to your income for that year and taxed. For most people this is a very expensive mistake.

You can also mix them - for example, put most of it in a RRIF and use some of it to buy an annuity.

Converting is not a taxable event. Moving money from your RRSP to your RRIF is a direct transfer between two accounts in your own name. No tax is withheld and nothing shows up as income. Your bank or brokerage handles the paperwork, usually with Form T2033 or their own version of it.

What if you do nothing? Most banks and brokerages will contact you in the year you turn 71, and many will set up a RRIF automatically if you don't respond. Please don't rely on that. If an RRSP is still open after the deadline, the full value can end up being treated as income - which on a $300,000 RRSP means a tax bill in the six figures. Call your institution well before December!

Can you convert earlier? Yes, at any age. If you're 70 and already want regular income from your savings, there's no reason to wait until the deadline. Some people also open a small RRIF at 65 for a tax credit I will cover later.

One last thing to do before you convert. The year you turn 71 is your last chance to contribute to your own RRSP. If you're still working or have unused room on your Notice of Assessment, use it before December 31. And if your spouse is younger, you can keep contributing to a spousal RRSP in their name until the end of the year they turn 71, as long as you have room.

The Minimum Withdrawal - How Much You Have to Take Out

Every year, starting the year after you open your RRIF, you have to withdraw at least a minimum amount. The CRA sets the minimum as a percentage of your RRIF's value on January 1, based on your age on January 1.

There's no minimum in the year you open the RRIF. So if you convert in December 2026, your first required withdrawal is in 2027. If you convert in March 2026, it's still 2027.

Here's the table. These percentages have been the same since 2015:

For ages 70 and under, the formula is 1 ÷ (90 − your age). A small number of very old RRIFs set up before 1993 use slightly different factors - your institution will know if yours is one of them.

A simple example

Margaret was born in 1956. She turns 71 in 2027 and converts her RRSP to a RRIF that year. There's no minimum for 2027.

On January 1, 2028, Margaret is 71 and her RRIF is worth $300,000.

• Her 2028 minimum: $300,000 × 5.28% = $15,840
• That's $1,320 a month if she takes it monthly

On January 1, 2029, her bank looks at the new balance and her new age (72) and works out the 2029 minimum the same way. It resets every year.

A few things about the minimum that surprise people

It's a minimum, not a maximum. You can take out as much as you want, whenever you want. There's no cap on a regular RRIF. Taking more just means paying more tax that year.

You choose how often you get paid. Monthly, quarterly, twice a year, or once a year. Some people like a monthly deposit that feels like a paycheque. Others take it all in December so the money stays invested as long as possible. Either is fine - pick whatever makes your budget easier.

If you forget, your institution takes care of it. They're required to pay out at least the minimum by December 31, so if you haven't taken it by late in the year, they'll send it to you.

The account won't run to zero if you only take the minimum. Because it's always a percentage of what's left, taking just the minimum means there's always something remaining. In your 70s, if your investments earn more than the minimum percentage, your balance can actually stay flat or grow. The percentages start climbing faster in your mid-80s, which is when most RRIFs start shrinking noticeably.

You don't have to spend it. The rule is that the money has to come out of the RRIF. It doesn't say what you do with it after that. If you don't need it, you can move it straight into your TFSA (if you have room), or into a regular investment account. More on that below.

There's no going back. Once money comes out of a RRIF, it can't be put back in.

The One Decision You Can Only Make Once - Your Spouse's Age

If you have a spouse or common-law partner who is younger than you, you can ask your bank to base your minimum withdrawals on their age instead of yours. A younger age means a smaller minimum, every year, for the life of the RRIF.

Back to Margaret. Say her husband Tom is 66 on January 1, 2028.

• Using Margaret's age (71): minimum is 5.28% = $15,840
• Using Tom's age (66): minimum is 4.17% = $12,510

That's $3,330 less she's forced to take out - and pay tax on - in the first year alone. The gap continues every year after that.

Two catches:

• You have to choose it before your first RRIF payment. It's usually a box on the RRIF application form. Once payments have started, you can't switch.
• You can't change your mind later, even if you separate or your spouse passes away.

Remember, this only lowers the minimum. You can still take out as much as you want in any year. So if you have a younger spouse, there's very little downside to choosing their age - it just gives you more flexibility. Ask about it when you set up the RRIF.

How RRIF Withdrawals Are Taxed

Every dollar you take out of a RRIF is taxable income, added to your other income for the year - CPP, OAS, any work pension, and so on. You'll get a T4RIF slip each February to put on your tax return.

Here's where most of the confusion comes from - tax withheld at the time of withdrawal and tax actually owed are two different things.

What gets withheld

• On the minimum amount - nothing is withheld. Your bank sends you the full minimum.
• On anything above the minimum, tax is withheld based on how much extra you take:

Quebec residents also have separate provincial tax withheld.

Why this causes surprise tax bills

"No tax withheld" does not mean "no tax." It just means you'll pay it in April instead.

Let's say Margaret's income without the RRIF - CPP, OAS and a small work pension - puts her in a tax bracket around 30%. Her $15,840 RRIF minimum arrives with no tax taken off. At around 30%, that's roughly $4,750 of tax she hasn't paid yet. If nobody told her that, it lands as a nasty surprise at tax time.

It can get a bit worse. If you owe more than $3,000 at tax time (or $1,800 if you live in Quebec) for two years running, the CRA will start asking you to pay quarterly instalments - sending money in four times a year instead of settling up in April. This catches a lot of new retirees off guard.

The easy fix - ask your bank to withhold tax from your RRIF payments anyway. You can request this even on the minimum. Pick a percentage close to your actual tax rate and the problem mostly disappears. You'll get back anything that was over-withheld when you file your return.

Splitting a withdrawal into smaller pieces doesn't save tax

You'll sometimes hear that taking money out in chunks under $5,000 "saves" tax because only 10% gets withheld. It doesn't. It only changes how much is withheld up front. Your real tax is worked out on your return based on your total income for the year. You'll just owe the difference in April.

The Tax Breaks That Come With a RRIF at 65+

Because RRIF withdrawals at 65 or older count as eligible pension income, they unlock two useful tax breaks.

1. The pension income amount

You can claim a federal tax credit on up to $2,000 of eligible pension income each year. RRIF withdrawals at 65+ count. If you don't have a work pension, your RRIF is often the only way to use this credit. Your province or territory has its own version too.

This is why some people open a small RRIF at 65 and take $2,000 a year out of it before they're required to. If you're already 70 and don't have a work pension, it's worth checking you haven't been leaving this credit on the table.

2. Pension income splitting with your spouse

If you're married or common-law and you're 65 or older, you can move up to half of your RRIF income onto your spouse's tax return. You do this on Form T1032 when you both file your taxes. No money actually moves between accounts - it's purely on paper.

This matters most when one spouse has most of the RRSP money. Two people each reporting $45,000 of income usually pay noticeably less total tax than one person reporting $80,000 and the other reporting $10,000. And if you're near the OAS clawback line, splitting can bring the higher-income spouse back under it. Both of you can also claim the $2,000 pension income amount.

You can decide how much to split each year when you do your taxes, so there's nothing to lock in now.

How Your RRIF Affects OAS and GIS

Because RRIF withdrawals are taxable income, they can affect your government benefits.

The OAS clawback. If your net income in 2026 is above $95,323, you start paying back 15 cents of your Old Age Security for every dollar over that line. RRIF withdrawals count toward that income. If a big RRIF minimum, plus a work pension, plus CPP is going to push you over, it's worth planning around - pension splitting and spreading withdrawals across years are the usual tools. More detail in the OAS post.

The Guaranteed Income Supplement. If your income is low enough to receive GIS, every dollar of RRIF income reduces your GIS by at least 50 cents. That's a very steep hidden cost on withdrawals that look tax-free on paper. If you're on GIS, read the GIS post before taking anything beyond your minimum.

TFSA withdrawals don't count for either one. That's why the TFSA is such a useful partner to the RRIF in retirement.

What If You Don't Need the Money?

This is a common situation, especially for people with a good work pension. The rules force the money out of the RRIF, but you don't have to spend it.

Move it into your TFSA. If you have TFSA room - and many people in their 70s have a lot of it - the money can go right back into a tax-free account. Many institutions can transfer investments directly from your RRIF to your TFSA in kind, meaning you don't have to sell anything. It still counts as a taxable RRIF withdrawal, but from then on it grows tax-free and won't affect OAS or GIS when you take it out.

Move it to a regular investment account. If your TFSA is full, you can keep it invested in a non-registered account. Future growth there is taxable, but it stays yours to use.

Give it away. Some people use RRIF money they don't need to help their kids or grandkids - topping up a grandchild's RESP, helping with a down payment, or gifting it to an adult child to put in their own RRSP. Canada has no gift tax. The RRSP-to-kids post walks through when that saves the family money and when it doesn't.

Donate it. Charitable donations give you a tax credit that can offset a good chunk of the tax on the withdrawal.

Should You Take Out More Than the Minimum?

For a lot of people, the honest answer is "maybe," and it's worth thinking about for one big reason - what happens to your RRIF after you die.

When you pass away, the CRA treats your RRIF as if you cashed out the whole thing the day before. Unless it goes to your spouse (more on that next), the full value gets added to your income on your final tax return. A $250,000 RRIF on top of your normal pension and CPP income means a large part of it gets taxed at the highest rate - over 50% in many provinces.

So for someone with more in their RRIF than they'll ever spend, the real choice isn't "pay tax or don't pay tax." It is pay some tax now at a moderate rate, or more tax later at the top rate.

Taking a bit more than the minimum each year - just enough to stay in a lower tax bracket and under the OAS clawback - can lower the total tax your family pays over your lifetime. It's the same idea behind the RRSP meltdown strategy, just later in life.

It isn't right for everyone. If you need every dollar to last, or you're on GIS, taking only the minimum may be the better choice. If you want to see the numbers for your situation, the Am I Ready to Retire calculator and the Drawdown Sequencer can help, and this is a great question to bring to an accountant or fee-only planner.

What Happens to Your RRIF When You Die

This is the section I'd most like people to read, because getting it wrong can cost tens of thousands of dollars and is completely avoidable.

You'll be asked to name who gets your RRIF when you open it. There are two ways to name your spouse, and they're not the same:

Successor annuitant (spouse only). Your spouse simply takes over the RRIF. The account stays open, the payments keep coming - just to them now. Nothing gets cashed out and there's no big tax bill. This is usually the simplest and cleanest option for married or common-law couples.

Beneficiary. The RRIF pays out to the person you name. If that person is your spouse, they can still roll it into their own RRSP or RRIF without tax, but there's more paperwork and some timing rules to follow.

If it goes to your kids or anyone else, the full value is taxed on your final return (unless the child was financially dependent on you). Naming them as beneficiary doesn't avoid that income tax, but in most provinces it does keep the RRIF out of your estate, which can save probate fees and speed things up.

If you name nobody, the RRIF goes to your estate. That usually means probate fees on top of the income tax, and delays for your family. A surviving spouse can sometimes still get the tax-free rollover through the estate using Form T1090, but it's more complicated than it needs to be.

A few things worth doing:

• Check who's named on your RRIF. Many people set up their RRSP decades ago and never updated it. Divorces, deaths and new marriages happen.
• If you're married, ask about naming your spouse as successor annuitant.
• Name a backup in case your spouse dies first.
• Quebec residents - beneficiary designations work differently in Quebec and are often made in your will instead. Talk to a notary.
• Make sure your executor knows the tax on the RRIF has to be paid before the estate is divided up.

A Few More Things Worth Knowing

You can have more than one RRIF, but you probably don't want to. Each one has its own minimum and its own paperwork. Consolidating into one RRIF makes everything simpler to track. Moving between institutions is a tax-free transfer.

Keep a cash cushion inside the RRIF. You're going to be taking money out every year for the rest of your life. A common approach is to hold a year or two of withdrawals in cash or GICs inside the RRIF, so you're never forced to sell investments right after a market drop to cover your minimum.

Don't get too conservative. At 71, your RRIF may need to last 20 years or more. Moving everything into cash or GICs the day you convert can mean your savings don't keep up with inflation. How much risk is right depends on you, but "RRIF" shouldn't automatically mean "no stocks."

Locked-in money is different. If you have a LIRA or locked-in RRSP from an old work pension, it converts to a LIF (Life Income Fund) instead. A LIF works like a RRIF, with the same minimum, but it also has a maximum you can take out each year.

The rules have been talked about, but haven't changed. In 2025 there was an election promise to cut the RRIF minimum by 25% for one year, and industry groups have been pushing to raise the age from 71. The minimum cut was officially dropped in November 2025. As of this writing, 71 is still the deadline and the table above is still the one that applies.

Common Misconceptions I've Heard

"I have to cash out my RRSP at 71." No. You have to convert it - usually to a RRIF. Only the yearly minimum has to come out, and the rest keeps growing tax-free.

"Converting to a RRIF means I pay tax on the whole thing." No. The conversion itself is tax-free. You only pay tax on what you withdraw.

"I have to sell my investments when I convert." No. They move over as they are.

"There's no tax on the minimum." There's no tax withheld on the minimum. You still owe tax on it at tax time.

"I can only take out the minimum." The minimum is the floor, not the ceiling. You can take out as much as you want.

"If I take the minimum, I'll run out of money." Not from the RRIF rules alone. Because it's a percentage of what's left, the minimum by itself never empties the account.

"My RRIF automatically goes to my spouse." Only if you've named them. Check your paperwork.

"My kids can roll my RRIF into their RRSP." Only if they were financially dependent on you. For working adult children, the full value is taxed on your final return.

"I'll wait until December 31 to convert, then I've got lots of time." Banks get very busy in December with everyone who turns 71 that year. Start the conversation in the fall.

Believe it or not, but some of these were relayed to me by my in-laws based on what their advisor told them. After all, most advisers are just salespeople and only have a basic understanding of the rules.

Your RRIF Checklist

If you turn 71 this year (born in 1955):

• Call your bank or brokerage now - don't wait for December
• Make any last RRSP contribution you have room for before December 31
• If your spouse is younger, choose to use their age for your minimum before your first payment
• Name your spouse as successor annuitant, or update your beneficiaries
• Choose how often you want to be paid (monthly, quarterly, yearly)
• Ask for tax to be withheld on your payments so April isn't a surprise

Every year after that:

• Check your minimum in January (your bank will tell you)
• Decide whether to take more than the minimum this year
• Use pension income splitting with your spouse on your tax return (Form T1032)
• Claim the pension income amount
• Move any RRIF money you don't need into your TFSA if you have room
• Watch the OAS clawback line, or your GIS if you receive it

The Short Version

• A RRIF is your RRSP switched into withdrawal mode - same investments, same tax shelter, no more contributions
• Your RRSP has to be converted by December 31 of the year you turn 71. The conversion itself is tax-free
• Starting the year after you open it, you must take out a minimum each year - a percentage of the January 1 balance that rises with age, from 5.28% at 71 to 20% at 95
• You can always take out more than the minimum, and you don't have to spend it - a TFSA is a great place for money you don't need
• If your spouse is younger, use their age to lower your minimum - but you must choose it before your first payment, and you can't change it later
• No tax is withheld on the minimum, but it's still taxable. Ask your bank to withhold tax so you don't get a surprise bill or end up on quarterly instalments
• At 65+, RRIF income qualifies for the $2,000 pension income amount and pension income splitting with your spouse
• RRIF income counts toward the OAS clawback ($95,323 for 2026) and reduces GIS
• When you die, your RRIF is taxed as if cashed out - unless it goes to your spouse. Name your spouse as successor annuitant and keep your beneficiaries up to date

Turning 71 isn't the deadline people make it out to be. Nothing gets taken away from you and nothing gets cashed out. Your RRSP just changes jobs - from saving for retirement to paying for it. Set it up properly once, make the two or three choices you only get to make once, and the rest mostly runs on its own.