If the surviving spouse is less than 71, the RRIF can be converted back to an RRSP, or RRIF. If the surviving spouse is over the age of 71, the RRIF must be transferred to an RRIF. Under the current rules, if you name your spouse as the beneficiary of the RRIF, the plan can be transferred to the spouse without triggering the tax. You can leave your remaining RRIF assets to your heirs upon your death by designating the proper beneficiary. What will happen to your RRIF when you die? In years where your returns are higher than your income, the RRIF will grow in value. Related article: Retirees should be more conservative with their investmentsįor example, if you invest in a GIC RRIF at 3% and you take out the minimum (5.28%) at age 71, your RRIF should drop in value after the income is paid. It does not take a lot of mathematical know-how to figure out that if you earn more money than you withdraw in income, the RRIF will grow. The longevity of your RRIF is simply based on how much money you make in investment return and how much you take out for income. Just like an RRSP, an RRIF lets you retain control over your investments, rather than handing over your money to a third party.
Shares of Canadian corporations, corporate and government bonds, Canada Savings Bonds, Treasury bills, mortgages, GICs, term deposits, covered call options, warrants, rights, Exchange Traded Funds (ETFs) and mutual funds that invest in eligible securities are all qualifying investments. You can hold the same investments that are eligible for an RRSP. Related article: Advantages of a Self-Directed RRSP Alternatively, you can establish a self-directed RRIF to include a combination of individual securities in your plans, such as stocks, bonds or Treasury bills (in addition to the investments mentioned above). The second decision is what to invest inįinancial institutions offer plans that can hold Guaranteed Investment Certificates (GICs), mutual funds, cash, or other financial instruments. This will allow you to withdraw less out of the RRIF if you do not want the income nor want to pay income tax on the income.
One of the ways to stretch the income is to base the minimum income on a younger spouse’s age. Once you reach age 71, the following schedule applies: Ageįor maximum tax deferral, you want to take out as little as possible from your RRIF for as long as possible. So if you’re 65, your minimum withdrawal would be 1÷(90-65)=4%. Related article: Minimum income rules for RRIFs RRIF minimums were once again changed in 2015 Before age 71, the minimum percentage of payout is worked out in the following way: 1÷(90 – your current age). The table below outlines the minimum withdrawals on RRIFs established after 1992, as set by the government. Technically, at 71, your minimum income is $0 because there was no value to the RRIF at the end of the previous calendar year. RRIF withdrawal rulesĬonverting to an RRIF will subject you to the minimum income rules but you do not have to start income until the year you turn 72. If you require a large lump sum for a major purchase, travel, or some other purpose, that’s available too.
If you need steady monthly, quarterly, or annual income, it’s available. You can tailor your income to your needs, subject to minimums imposed by the federal government. Related article: How much income do you need in retirement? Even if you don’t need or want the extra income, you have the minimum income rules to contend with. If you spend too much too fast, you will run out of money. This decision will have the greatest impact on the longevity of your money. The first thing you will need to determine is how much income you need or want. Related article: Shop around before choosing an RRIF The first decision is income RRIFs come in a number of shapes and sizes. An RRIF provides a high level of control over the investments in your retirement plan, the advantage of tax-free growth of assets within the plan, as well as maximum flexibility in establishing an income stream. You must convert RRSPs to income by age 71Įven if you do not need periodic income or any income at all, you must convert the RRSP into income in the year you turn age 71.Īn RRIF is a comfortable transition because of its similarity to an RRSP. When it comes time to convert RRSPs to income, most Canadians choose a Registered Retirement Income Fund (RRIF) as their retirement income option.
0 kommentar(er)
