What Is a RRIF — and Why Age 71 Is a Big Deal
Your RRSP can't live forever. At age 71, the Canadian government requires it to transform into something that pays you — whether you're ready or not. Understanding this transition can save you a significant amount in taxes.
What Is a RRIF?
A Registered Retirement Income Fund (RRIF) is what your RRSP becomes after you stop contributing and start withdrawing. It holds the same investments — stocks, bonds, ETFs — just under a different set of rules. The critical difference: you must withdraw a minimum amount every year, and those withdrawals are taxed as income.
RRSP (before 71)
- ✔ You contribute money in
- ✔ Grows tax-deferred
- ✔ You withdraw on your schedule
- ✔ No mandatory withdrawals
RRIF (after 71)
- ⚠ No more contributions allowed
- ✔ Still grows tax-deferred
- ✔ You can withdraw anytime, any amount
- ⚠ Mandatory minimum withdrawal every year
The Deadline Is Non-Negotiable
By December 31 of the year you turn 71, your RRSP must be converted to a RRIF, used to purchase an annuity, or withdrawn entirely (and fully taxed). Most people convert to a RRIF. Your financial institution handles the conversion — you don't lose your investments.
Meet James, age 68
James is a retired teacher in Hamilton, Ontario. He has $400,000 in his RRSP and is currently living on a modest defined benefit pension of $32,000/year. In three years, James's RRSP must convert to a RRIF. He'll need to withdraw a mandatory minimum each year — and pay tax on every dollar. James wants to understand exactly how much that means, and how to plan for it.
Mandatory Minimum Withdrawal Rates (CRA)
The CRA sets a minimum percentage you must withdraw from your RRIF each year. The percentage increases with age — a design that ensures the money flows out over your lifetime. You can always withdraw more than the minimum; you just can't withdraw less.
| Age | Min. Rate | James's Withdrawal (on $400K) | Age | Min. Rate |
|---|---|---|---|---|
| 71 | 5.28% | $21,120 | 83 | 7.71% |
| 72 | 5.4% | $21,600 | 84 | 8.08% |
| 73 | 5.53% | $22,120 | 85 | 8.51% |
| 74 | 5.67% | $22,680 | 86 | 8.99% |
| 75 | 5.82% | $23,280 | 87 | 9.55% |
| 76 | 5.98% | $23,920 | 88 | 10.21% |
| 77 | 6.17% | $24,680 | 89 | 10.99% |
| 78 | 6.36% | $25,440 | 90 | 11.92% |
| 79 | 6.58% | $26,320 | 91 | 13.06% |
| 80 | 6.82% | $27,280 | 92 | 14.49% |
| 81 | 7.08% | $28,320 | 93 | 16.34% |
| 82 | 7.38% | $29,520 | 94 | 18.79% |
Source: CRA RRIF minimum withdrawal factor table (2024). Rates apply to the RRIF balance at the start of each calendar year.
James's Annual RRIF Withdrawals (Ages 71–94)
Starting balance: $400,000 at age 71. Assumes 5% annual growth inside the RRIF. Withdrawals are mandatory minimums only.
James's RRIF Balance Over Time
Even with mandatory withdrawals, the RRIF continues growing (at 5%/yr) for many years before declining
The Tax Reality for James
James already has $32,000/year in pension income. At age 71, his minimum RRIF withdrawal will be approximately $21,120 (5.28% of $400,000). Combined with his pension, his total income becomes $53,120 — pushing him into a higher tax bracket.
James's Year 1 RRIF Tax Situation (Ontario)
Approximate only. Doesn't include CPP, OAS, or eligible pension credit. Consult a tax professional for personalized planning.
Smart Strategies to Reduce RRIF Tax
Start drawing down your RRSP early
Many Canadians draw from their RRSP between ages 60–71 to smooth income and reduce the mandatory RRIF balance. James could draw $20K/year from his RRSP at 68–70, paying a lower marginal rate now while keeping OAS clawback at bay.
Spousal RRSP contributions
If James has a younger spouse, he could have contributed to a Spousal RRSP, allowing future RRIF withdrawals to be taxed in a lower-income spouse's hands — splitting the income.
RRIF income splitting at 65+
Retirees 65+ can split up to 50% of qualifying pension income (including RRIF withdrawals) with a spouse, potentially reducing combined household tax by thousands per year.
Withdraw more than the minimum strategically
Counterintuitively, withdrawing more in low-income years (e.g., before OAS or CPP kick in) can prevent future forced withdrawals at higher rates. Plan the distribution curve deliberately.
What Happens to the RRIF When You Die?
If you have a surviving spouse or common-law partner, they can roll your RRIF into their own RRSP or RRIF without immediate tax. If you don't, the full remaining RRIF balance is added to your estate as income in your final tax return — potentially triggering a very large tax bill. Estate planning around your RRIF is essential.
⚠️ Important
If James dies at 85 with $350,000 still in his RRIF and no spouse, that full amount is taxable income in his final year — potentially at a 50%+ marginal rate. Naming beneficiaries carefully and planning drawdown speed are critical decisions.
Key Takeaway
A RRIF isn't a trap — it's just a forced drawdown schedule. The key is to plan for it before age 65, not when the deadline arrives at 71. Strategies like early RRSP drawdowns, spousal income splitting, and deliberate withdrawal pacing can significantly reduce your lifetime tax bill. James's $400,000 RRSP will still pay him well into his 90s — as long as he plans the conversion thoughtfully.
Model your own RRIF conversion and withdrawal schedule