A Registered Retirement Income Fund (RRIF) is an account to which RRSP balances can be transferred without being taxed at the time of transfer

• registered with Canada Revenue Agency to receive retirement income
• assets transferred from RRSPs intact and tax-free
  • proceeds from a locked-in RRSP (LIRA) go to a locked-in RRIF (LIF)
• can transfer up to December 31 in the year of the planholder’s 69th (71st) birthday
• RRIF earnings are tax-sheltered
• can have multiple RRIFs, managed or self-directed

Advantages

• tax-free investment growth
• assets transferred from RRSPs intact and tax-free
• tax on growth deferred until income withdrawn (then taxed at the marginal tax rate)
• tax-free switches (no deemed disposition)
• tax-free transfer the spouse upon death, if spouse is the beneficiary
• no maximum age for opening or closing plan

Disadvantages

• minimum withdrawal required each year (starting at age 71)
• taxed on withdrawals
• withholding tax on withdrawals above minimum required

Withdrawals

• mandated minimum annual withdrawals based on the age of the plan holder, or spouse if younger
  • can withdraw more → more flexible than an annuity
• withholding tax applies on withdrawals above the minimum
• minimum withdrawal also affected by
  • the date on which the RRIF was established
  • whether the plan was subsequently changed

Death of the Plan Holder (annuitant)

• you (as the plan holder) are deemed to have received the fair market value of your RRIF just before death (deemed disposition)
• RRIF proceeds are included in your terminal tax return
• spouse = successor annuitant?
  • RRIF continues, income received is taxed in the hands of your spouse
• spouse = sole beneficiary?
  • funds can be transferred to
    • RRSP, if spouse under age 71
    • RRIF → minimum annual withdrawals start in the following year
    • buy an annuity
• beneficiary = financially dependent child or grandchild
  • financially dependent due to physical or mental infirmity
  • can defer paying tax on the transfer to RRSP, RRIF or qualified annuity
  • else, if child or grandchild is under 18, RRIF can be transferred to a term certain annuity that makes payments until age 18

• designated beneficiary gets RRIF balance on death of the plan holder
• at death, planholder is deemed to have disposed of the RRIF at fair market value → taxed in the terminal return
• if spouse is the successor annuitant, RRIF continues and spouse is taxed on income as received
• if spouse or (grand)child financially dependent due to physical or mental infirmity is named sole beneficiary, RRIF funds can be transferred to RRSP, RRIF or used to buy an annuity
• if (grand)child is dependent but not physically or mentally infirm, can buy an annuity with payments to age 18