Registered Retirement Income Fund

The benefits of opening a RRIF

A Registered Retirement Income Fund (or RRIF) is usually opened when you transfer money in from an existing RRSP. It is a type of savings account which has the advantage of providing you with a consistent and regular source of income throughout your retirement. Here are some good reasons to consider opening a RRIF.

  • You retain control over how your money is invested. You can choose between a wide variety of investment options such as mutual funds, segregated funds, and GICs.
  • You benefit from tax-free savings. When you transfer funds from your RRSP to a RRIF you won’t pay any tax on your investment earnings or on the funds that remain in the RRIF, though you will have to pay tax on any money that you subsequently withdraw from the plan.
  • You have the option of naming your spouse as your beneficiary so that they can receive the funds in your RRIF in the event of your death, without paying any tax. This is referred to as a “tax free spousal rollover.” If you choose to name your spouse as your “successor annuitant” then they are able to inherit the RRIF so that they can receive your payments from the account.
  • Another benefit of a RRIF is that the minimum annual withdrawal amounts depends on your age. The age of your spouse can be used to base your minimum annual withdrawals on. If they are younger than you, this could potentially reduce the amount of tax that you pay on your withdrawals. Your advisor can help determine how best to set up your RRIF account taking all of these variables into consideration.

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