Registered Retirement Income Funds

Take a SmartStep and keep control of your Retirement funds

A Registered Retirement Income Fund is one of the options that RRSP account holders face once they turn 71 and RRSP plans are forced to close. An RRSP holder has 2 other choices; withdraw everything as cash. If there is a large balance, the tax cost could be huge or you can convert the RRSP into an annuity. This will allow the RRSP holder to receive a set monthly payment, based on their RRSP balance, until death.

The most popular option is to convert the RRSP into a RRIF. This will allow the investments to continue to grow tax free and is subject to a required annual withdrawal schedule that increases as the account holder gets older. A RRIF may be set up at Comtech Fire as a savings or term deposit account and may also be held in mutual funds*.

RRSP’s must be converted to a RRIF by Dec 31st of the year you turn 71 years of age. 

How does a RRIF work?

Set up

  • Decide what type of RRIF you want; savings, term deposits or mutual funds*
  • Plan your withdrawals ensuring that you take out the required minimum amount on either an annual, quarterly or monthly basis
  • Choose a beneficiary; if you don’t more of your money will go to the government in taxes
  • Contact your Comtech Fire branch or Financial Service Officer for information and advice on the best options for you

Withdrawals

  • You must withdraw a minimum amount each year, starting after the year in which your RRIF is established
  • The minimum is a percentage set by the federal government, which increases with age
  • There is no maximum withdrawal amount; you may withdraw any or all funds at anytime
  • You may elect to use your spouse’s age in determining the minimum payment calculation. This must be done prior to income commencement and cannot be reversed.
  • If you have ongoing savings needs, you can now invest up to $5,500 of your RRIF income annually in a Tax Free Savings Account.  The investment income earned in the Tax Free Savings Account will not affect your Guaranteed Income Supplement. Currently, income earned on non-registered investments is used to calculate eligibility for federal income-tested benefits and credits. The income earned, or the funds withdrawn from your Tax Free Savings Account will not affect your eligibility for federal income-tested benefits and credits, such as Old Age Security Benefits, Canada Child Tax Benefit, or Employment Insurance.

Taxation

  • Tax is only paid on the money withdrawn
  • Since RRIF withdrawals are considered to be pension income, RRIF income is eligible for income splitting with a spouse. This may result in lower overall family taxation providing the other spouse has lower income.
  • Upon death, 100% of the income from a RRIF can be;
    • paid to the surviving spouse or common-law partner
    • the balance can be transferred tax-free to the spouse or common-law partner’s RRIF or RRSP
    • the balance may be transferred to a financially dependent child or grandchild

Additional Benefits

  • Variety of options to choose from and the flexibility to control your funds
  • Comtech Fire’s Registered Retirement Income Fund plans, provided they are invested in savings accounts or term deposits, are fully insured by the Deposit Insurance Corporation of Ontario.
* Mutual funds, other securities and securities related financial planning services are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc. Mutual Funds are also offered through Qtrade Asset Management Inc.
 

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