What is a Registered Retirement Income Fund (RRIF)? A Registered Retirement Income Fund (RRIF) is vehicle for investing registered retirement income and for tax deferral until the money is withdrawn. You do not contribute money to a RRIF, you receive an income from a RRIF. Retirement income is accumulated in an RRSP. When this money is to be withdrawn in a regular retirement income stream, the RRSP is converted to a RRIF. You can convert your RRSPs into a RRIF at any time before the age of 71. Canadian law requires that you convert your RRSPs into a RRIF by December 31st of the year you celebrate your 71st birthday.

RRIFs can be made up of many different types of investments including mutual funds, segregated funds, GICs, stocks, and simple annuities. The investment income in a RRIF accumulates tax free, but it is subject to tax upon withdrawal and each year the RRIF holder must withdraw at least a minimum portion of the money in the fund and pay tax on it.

What are the benefits of a RRIF?

  • The interest and investment in a RRIF is allowed to grow tax free
  • You can control how your money is invested
  • You can maximize tax deferral opportunities
  • It may be possible to calculate the minimum withdrawal amount according to the age of the beneficiary’s spouse, which can mean lower minimum withdrawals if the beneficiary’s spouse is younger
  • They give you withdrawal flexibility

Pension Money

Money from a pension plan MUST be used to provide income throughout retirement. The money from a pension is labeled “locked-in”.

What is a Life Income Fund (LIF)? A Life Income Fund (LIF) is a locked-in retirement income investment plan that allows you to convert Locked-in RRSPs or LIRAs (Locked-in Retirement Account) to income. There are minimum withdrawal amounts that must be made each year. The rules on converting LIFs to annuities at age 80 vary from province to province. Many provinces allow you to “unlock” a portion of your pension money when a LIF is set up. This “unlocked” money may be withdrawn in cash or moved to a RIF where the withdrawal rules are more flexible.

What are the benefits of a LIF?

  • You have access to your funds at all times
  • The interest on a LIF accumulates tax free until funds are paid out
  • The payments qualify for the pension income tax credit
  • You have flexibility and control of the investments and payments

What is a Locked-in Retirement Income Fund (LRIF)? A Locked-in Retirement Income Fund (LRIF) provides retirement income for life from funds which originate in an eligible registered pension plan or LIRA. There is no requirement to convert your LRIF to a life annuity at age 80. They are not available in all provinces.

What are the benefits of a LRIF?

  • There no requirement to convert to a life annuity at age 80
  • Interest accumulates tax free until funds are paid out
  • There is payment flexibility subject to annual minimum and maximum payments
  • The payments qualify for the pension income tax credit