Retirement Income Fund
This investment plan is for you if:
- you'd like a flexible way to manage your retirement income.
- you've got an RRSP waiting for a plan.
- you've got better things to worry about than having enough
money in your golden years. Like which RV to buy.
Key Features & Benefits
A Registered Retirement Income Fund (RRIF)* is best thought of as an extension of a Registered Retirement Savings Plan (RRSP)—a RRSP is used to save for retirement, while a RRIF is used as one of the methods to withdraw income during retirement.
With a RRIF, contributions are not allowed and you must make minimum mandatory withdrawals each year. An RRSP is required to be converted to a retirement income option such as a RRIF or a life annuity by December 31 of the year in which you turn 71. However, you do have the option to convert your RRSP to a RRIF at anytime before then.
Benefits at a glance
- Includes deposit options such as daily interest, term deposits between 30 days and 5 years, and mutual funds*
- Allows withdrawals based on declining terms directly from the term rather than having to keep funds in the daily interest option for this purpose
- Offers monthly, quarterly, semi-annual, or annual payments and can be tailored to suit your individual needs
- Permits payment schedule changes at any time
Interested in finding out more? Check out our RSP/RRIF Basics online brochure (PDF) or our Retirement Income Options online brochure (PDF)—both chalked full of great information. You will need Adobe Acrobat Reader to view these PDF documents. If you do not already have Adobe Acrobat Reader, download this free software.
Term deposits are a secure investment choice, guaranteeing your deposit and rate of return. You can have all or a portion of your RIF holdings in one or more credit union term deposits.
Mutual funds give you easy access to virtually every type of investment—at home and around the world. You can choose to hold all or a portion of your RIF holdings in mutual funds.
Segregated funds offer the same features and options as mutual funds, but they protect your investment savings from sudden market declines or in the event of your death. You can choose to hold all or a portion of your RIF holdings in segregated funds.
An annuity guarantees that you will receive an income for life, or as long as the annuity contract specifies. A RRIF can be converted into an annuity at any time.
Life Income Funds
Key Features & Benefits
LIFs are similar to RRIFs—they are used to hold and pay out funds at retirement. The difference between the RRIF and the LIF is that the RRIF is used for transferring individual RRSP assets to a retirement income plan and the LIF is used for transferring Group Retirement Savings Plan or other employer sponsored pension assets.
- Like RRIFs, a LIF converts your savings into income and lets you continue to shelter your investment from taxes after you turn age 71.
- A minimum and maximum annual withdrawal is allowed, based on pension legislation.
- The maximum limit is designed to ensure a certain amount of funds is available to provide lifetime income.
Things to Consider
When you’re considering the frequency of withdrawals from your RIF, here are some helpful tips:
- Know how much income you want from your RRIF and the most advantageous time(s) for you to receive it.
- Taking annual payments at the end of the year will allow you to earn the maximum growth opportunity for your RRIF investments.
- Once you start receiving RRIF income, quarterly income tax installments may need to be paid if you’re not paying them already. If you receive annual payments at the end of the year, the income will still need to be included in your quarterly installments and you’ll end up owing tax before you actually receive the money.
When you’re considering the amount of withdrawals from your RIF, here are some helpful tips:
- With self directed RRIFs, your investment selections should be set so that they will provide you with the funds you’ll need to meet the amount of the payments you have chosen.
- RRIF term deposits are the most flexible for making unscheduled withdrawals.
Other things to consider:
- If you don’t convert your RRSP to a RRIF, it is considered "deregistered" and the money you’ve saved will be paid out as cash and fully taxed as income.
- It’s good to understand the pros and cons of the type of investments you are holding when it comes to liquidity, unscheduled withdrawals, and market valuation.
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