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Before making a major financial decision you
should consult a qualified professional.
As soon as an RRIF is established, withdrawals can be made from it, unless it is a
locked-in account, in which case maximum annual withdrawals will be in
effect. If the account is not locked in, there is no limit to the
withdrawal amount, but tax will be withheld on amounts withdrawn in excess of
the minimum.
There is no withdrawal necessary in the year a RRIF (Registered Retirement
Income Fund) is set up, but there are minimum amounts that must be withdrawn
annually starting in the year after setup. Unless certain types of
annuities are held in the RRIF, the minimum withdrawal amount is calculated by
multiplying the market value of the RRIF holdings at the beginning of the year
by a "prescribed factor".
Multiple RRIF Accounts
If an individual has multiple RRIF (or a RRIF and a LIF or LIRA) accounts, the
minimum withdrawal amount is calculated separately for each account. If the maximum
amount is withdrawn from one LIF, or more than the minimum from one RRIF, it doesn't reduce the minimum amount that must
be withdrawn from another RRIF of the same holder.
RRSP/RRIF Withdrawal
Calculator
Use our RRSP/RRIF
Withdrawal Calculator to project your earnings and withdrawals from your
RRIF for the next 40 years. The
calculator will calculate
minimum withdrawals, fixed annual withdrawals adjusted for
inflation, or withdrawals using a fixed number of years.
If you haven't converted your RRSP to a RRIF yet, you can still use this
calculator to project your earnings and
withdrawals over the next 40 years.
Timing of Minimum
Annual Withdrawal
When establishing a RRIF, the RRIF holder can usually
specify to the financial institution or brokerage the timing of the minimum
withdrawal, including whether it is to be taken out in a lump sum in one
withdrawal (best for in kind withdrawals), or to be taken out in monthly
payments. Once an RRIF is established, the required minimum annual withdrawal amount
is usually shown on account statements provided to the holder of the RRIF. The
information provided should also include the amount that has been withdrawn
up to the statement date.
The RRIF holder can specify a date near the end of the year, but then may
actually make their withdrawal at any time earlier in the year. If the
minimum withdrawal is not made by the planned date, it will usually be done
automatically by the financial institution.
Withholding Tax on RRIF
Withdrawals
No tax is withheld when the minimum
amount is withdrawn from a RRIF - see our article on withholding
taxes on RRIF and RRSP withdrawals. When more than the minimum
amount is withdrawn, there is tax only on the excess over the minimum amount.
RRIF Maximum
Withdrawal - Only For Locked-In Accounts
There is no maximum withdrawal for RRIFs, unless they are
locked-in, such as an LRIF or LIF. The RRIF
calculator will not calculate maximum withdrawals for
locked-in accounts. If you have a locked-in account, see the article "LIF
and LRIF minimum and maximum
withdrawals" for help
in determining your maximum withdrawal amount.
In Kind RRIF Withdrawals
RRIF withdrawals can also be made by an "in
kind" withdrawal of investments.
The 2015 Federal Budget reduced the RRIF
withdrawal factors for both pre-1993 and post-1992 RRIFs, and all RRIFs now
use the same prescribed factors. The
legislation for this change received Royal Assent in June 2015 and is now in
effect, starting with 2015 withdrawals. See our Table
of Prescribed Factors for RRIF Withdrawals, which also shows the %
increase in the rate each year.
Using Age of
Spouse to Calculate Minimum RRIF Withdrawals
Income Tax Act s. 146.3 (1) definition "minimum
amount" (b)
No election is required if the annuitant is going to use their own age to
calculate prescribed factors.
Note that the annuitant can elect, prior to receiving any
payments under the fund, to use the age of their
spouse or common-law partner in calculating
the prescribed factor, for both qualifying and non-qualifying RRIFs.
If the spouse is younger (there is no minimum age that can be used), this results in a lower minimum withdrawal, for
annuitants who wish to make lower withdrawal amounts. If your financial
institution has automatically converted your RRSP to a RRIF before you have
completed the paperwork to make this election, this is not a problem, although
they may tell you it is. As long as no payments have been received by
you under the fund, you can make the election.
Once this election has
been made, it is in place for the duration of the RRIF and cannot be changed,
even in the case of divorce, separation, or the death of the younger
spouse. However, if another RRIF is established and funds are transferred
to the new RRIF, a new election can be made. See paragraphs 10 & 11 of IC
78-18R6 (link at bottom).
Using the age of a younger spouse for your RRIF withdrawals does not affect
your own age when you are claiming the pension
income tax credit.
Tax Tip: If you elect to use the age of a younger
spouse, this doesn't prevent you from making larger withdrawals, but there will
be withholding tax
payable on the amount in excess of the minimum withdrawal.
2020 Minimum
Withdrawals & Withholding Tax
The
amount of mandatory withdrawal from a RRIF in 2020 was reduced by 25% for all
RRIF holders. This was
announced by the federal government and the Quebec
government. See our COVID-19
Resources page. To determine your 2020 minimum withdrawal, calculate
the usual minimum and then multiply by 75%. The age of the RRIF holder
does not matter.
For a RRIF started after 1992, the prescribed
factor was 1/(90-age), but only while the annuitant (owner) is under 71 years
old. Age is the age of the annuitant at the beginning of the year.
Thus, if the annuitant is 70 years old at the beginning of the year, the
factor is 1/(90-70) = 1/20 = .05.
For example, if the fair market value of the holdings in the RRIF were
$100,000 at the beginning of the year and the annuitant was 75 years old at
the beginning of the year, then
the minimum withdrawal for that year would be $100,000 x .0785 = $7,850.
Pre-1993 RRIFs -
Prescribed Factors Before 2015
If the RRIF was started prior to 1993, then it is a "qualifying RRIF", as long
as no new property was transferred into the RRIF after 1992, other than from
another qualifying RRIF. The prescribed factor for a qualifying RRIF was
1/(90-age) while the annuitant (owner) of the RRIF is under 79 years
old. Thus, if the annuitant is 72 years old at the beginning of the
year, the factor is 1/(90-72) =
1/18 = .0556.
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