What is a RRIF?
Withdrawals from a RRIF
You must withdraw at least the annual minimum amount from you RRIF each year. You withdraw money from a RRIF according to one of three options chosen by you. You are able to change your choice of options each year as your financial requirements change.
The Annual Minimum Amount Option
There are two formulae that apply to the Minimum Amount Option depending on the year that the RRIF is purchased. The tables below illustrate the differences in the RRIF formulas and percentages Pre-1993 versus Post-1992.
|RRIF Purchased prior to Jan 1, 1993||Purchased after Dec 31, 1992|
|Age Range||Formula||Age Range||Formula|
|Up to 78||90 – age at Jan. 1st||Up to 70||90 – age at Jan. 1st|
|79 – 93||% of plan at Jan. 1st||71-93||% of plan at Jan. 1st|
|94+||20% of plan at Jan. 1st||94+||20% of plan at Jan. 1st|
The percentages are applied to the value of your RRIF at December 31st of the preceding year, according to your age at that time.
The Specified Payment Option
With a Specified Payment Option, each year you can determine how much money you wish to take from the plan, and how often. For example, one year you may need $500 a month from the plan; the next month you may want only a single payment of $1,000. As long as the amount meets the annual minimum amount requirement for your age, and subject to your investment selection, it’s your choice to make.
The Specified Term Payment Option
Instead of specifying the amount of income that you want from your RRIF, you may wish to specify the number of years the RRIF will pay you before it is depleted. For example, you might choose this option if you retire at age 55 with an RRSP, but are not eligible immediately to draw other retirement income such as a company pension plan, CPP or OAS. Under this option you can convert your RRSP to a RRIF, which would pay an income until the other sources begin.
There’s nothing to prevent you from taking more than the minimum out of your RRIF. In fact, you can withdraw the entire amount at any time, but you will then have to declare the withdrawal amounts as part of your income and pay the applicable withholding taxes for that year. The amounts you withdraw from your RRIF each year must also be declared as income.