Tax and Accounts

RRIF (Registered Retirement Income Fund)

Mandatory drawdown vehicle that an RRSP must convert to by December 31 of the year the holder turns 71.

Definition

Once converted, holdings continue to grow tax-deferred but the holder must withdraw at least the prescribed minimum amount each calendar year, calculated as a percentage of the account's January 1 fair market value. The minimum percentage starts at 5.28% at age 71 and rises to 20% at age 95+. All withdrawals are fully taxable as income in the year received. The Canada-US tax treaty extends the RRSP's exemption from U.S. dividend withholding tax to RRIFs as well. There is no maximum withdrawal limit.

Source

Income Tax Act s.146.3; Canada-US Tax Treaty Article XVIII

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