What is a RRIF?

Moving investments from an RRSP to a RRIF avoids the need to sell off the investments in the registered account and pay tax on any capital gains. After you open a RRIF, you will be required to withdraw a certain percentage of the balance each year according to your age.

Instead of converting an RRSP to a RRIF, you also have the option to cash out your RRSP or buy an annuity.

Example: “Like RRSPs, RRIFs allow your investments to grow tax-free; you only pay tax on money withdrawn from these accounts.”

Read more on RRIFs:

• How much should you withdraw from your RRIF?
  Sandy wants to deplete a registered retirement income fund by age 90 and wonders how much to take out each year.
• Reasons to consider early RRSP and RRIF withdrawals
  Certified Financial Planner Jason Heath gets a lot of reader-submitted questions about early RRSP and RRIF withdrawals and how much to take out. Here’s a primer.
• Do RRIF beneficiaries pay tax?
  Is it possible to avoid tax as a RRIF beneficiary? Find out if timing could be an issue, as well as rules around withdrawals, too.
• How much are withholding taxes on RRSPs and RRIFs?
  Anne wants to take extra RRIF withdrawals beyond her annual minimum amount and is worried about the tax implications.

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MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.

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