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As you get closer to retirement, you’ve probably started considering your options for the funds in your Registered Retirement Savings Plan (RRSP). While you could withdraw the entire amount in a single transaction, many Canadians choose to change their RRSP to a Registered Retirement Income Fund (RRIF). Let’s walk through some of the key RRIF withdrawal guidelines you’ll need to know when it’s time to start withdrawing income from your RRIF.
What is an RRIF?
RRIFs are accounts registered with the Canadian federal government that are made to help fund your retirement—they’re like the reverse of an RRSP. With an RRSP, you’re saving for retirement by putting money in. With a RRIF, you’re taking money out to pay for your retirement. The money in your RRIF can still be invested and grow tax-free until you withdraw it. However, unlike RRSPs or other registered accounts, you can’t make new contributions to a RRIF. The only way to fund it is by transferring money from an RRSP or another retirement savings plan.
Minimum annual Withdrawal Requirements
As an RRIF holder, you’re required to withdraw a specified minimum amount annually. This starts in the year after you set up your RRIF, and the payout period is designed to extend throughout your entire lifetime. The minimum withdrawal amount is determined by your age as of the beginning of the year, as calculated by your financial institution.
But you can choose to base the calculation on the age of your spouse or common-law partner if they’re younger, which can lower the minimum amount. Just keep in mind that this is a one-time decision—you can’t revert to your age later.
The Canada Revenue Agency (CRA) sets these minimum withdrawal percentages to help ensure that retirees can access their savings gradually while managing their tax obligations. Here are the current age and percentage increases set by the CRA:
Age Minimum withdrawal
65 4.00%
66 4.17%
67 4.35%
68 4.55%
69 4.76%
70 5.00%
71 5.28%
72 5.40%
73 5.53%
74 5.67%
75 5.82%
76 5.98%
77 6.17%
77 6.36%
79 6.58%
80 6.82%
81 7.08%
82 7.38%
83 7.71%
84 8.08%
85 8.51%
86 8.99%
87 9.55%
88 10.21%
89 10.99%
90 11.92%
91 13.06%
92 14.49%
93 16.34%
94 18.79%
95 and older 20.00%
Here’s how this would look. If your RRIF is valued at $1,00,000 on January 1, 2025, and you’re 75 years old, the minimum withdrawal rate of 5.82% means you’d need to withdraw at least $58,200 (1,000,000 x 0.0582) for that year. If you were 85 instead, with a minimum rate of 8.51%, your required withdrawal for 2025 would be $85,100 (1,000,000 x 0.0851).
For regular RRIFs, there’s no maximum withdrawal limit on how much you can withdraw, so you can take out as much as you need beyond the minimum. You can also choose how often you want to withdraw from your RRIF—monthly, quarterly, semi-annually, or annually.
The minimum withdrawal amounts from your RRIF are treated as taxable income on your annual tax return, but they’re not subject to withholding tax. However, any amount you withdraw above the minimum will be subject to withholding tax.
If your RRIF was set up before the end of 1992, there are different withdrawal calculations that apply. You can check those out here.
Withdrawal Age Rules
Since an RRIF is a government-registered account, there are specific rules around withdrawals. By December 31 of the year you turn 71, you must convert your RRSP into an RRIF or an annuity. However, you can choose to convert it earlier if it fits your financial plans.
Also, withdrawals don’t start immediately—you’ll begin taking money out in the calendar year after you set up your RRIF. For example, if you converted your RRSP to an RRIF in 2025, your withdrawals would start in 2026.
RRIF and tax Implications
Luckily, converting your RRSP to a RRIF isn’t a taxable event since you’re not withdrawing funds at this stage yet. However, the funds withdrawn from your RRIF annually are considered taxable income for the year in which you receive them, which means you will pay tax on those. One advantage is that the minimum withdrawal might put you in a lower tax bracket during retirement, which could mean paying less in taxes.
If you withdraw more than the minimum amount, you’ll have to pay withholding tax. What this means is your financial institution will withhold taxes on the extra amount at the time of withdrawal. The rate of withholding tax depends on how much you withdraw. The good news is that the minimum amount doesn’t trigger any withholding tax—it only applies once you go over that. Across Canada (except Quebec), the withholding tax rates are the same for residents.
It’s also important to know that at death, the remaining balance in your RRIF becomes fully taxable unless it’s rolled over to a spouse or a financially dependent child.
Ways to Reduce RRIF Taxes
Here are some ways to help you save on RRIF taxes:
Only Withdraw the Minimum
The money in your RRIF can keep growing tax-deferred, meaning you won’t pay taxes on the earnings as long as it stays in the account. The longer your funds stay in your RRIF, the more potential they have to grow. Just keep in mind that if you withdraw more than the minimum amount, an additional withholding tax will apply to the extra amount.
Pension Splitting with Your Spouse
You can split RRIF income with your spouse or common-law partner for tax purposes, which can be a great way to save on taxes. If you’re a Canadian resident aged 65 or older, you can split up to 50% of your RRIF income with your partner.
This can lower your family’s overall tax bill, especially if one of you is in a lower tax bracket. Plus, if your spouse or partner is at least 65 and a Canadian resident, they can use the income you split with them to claim the pension income tax credit.
Talk to a Tax Professional
If you have a sizable RRSP, it’s a good idea to talk to a tax professional about converting it to an RRIF. They can help you understand the tax impact of early withdrawals and show you how spreading out your withdrawals could help you manage your taxes more effectively in retirement.
Learn More with Oaken Financial
RRIFs are built to give you a steady income during retirement. Each year, you’ll need to withdraw at least a minimum amount, which will count as income on your annual tax return. To learn more about Oaken RIFs, book an appointment for an in-person chat or call us at 1-855- OAKEN-22 (625-3622). You can even apply online today in as little as five minutes.
