RRIFs & LIFs: What Happens to Your RRSP at 71
What is a RRIF?
A Registered Retirement Income Fund (RRIF) is what your RRSP becomes when you convert it at age 71. Instead of contributing, you start withdrawing. The government requires minimum annual withdrawals, and you pay tax on what you take out.
The Age 71 Rule
By December 31 of the year you turn 71, you must:
- Convert your RRSP to a RRIF, or
- Buy an annuity, or
- Withdraw the full amount (and pay a lot of tax)
Most Canadians choose the RRIF option for flexibility.
How RRIFs Work
- No more contributions: You can't add money to a RRIF
- Mandatory withdrawals: You must take out a minimum amount each year
- Taxable income: Withdrawals are added to your income and taxed
- Investments stay invested: Your money continues to grow tax-deferred
RRIF Minimum Withdrawal Rates (2026)
| Age | Minimum % | On $500K |
|---|---|---|
| 71 | 5.28% | $26,400 |
| 75 | 5.82% | $29,100 |
| 80 | 6.82% | $34,100 |
| 85 | 8.51% | $42,550 |
| 90 | 11.92% | $59,600 |
| 95+ | 20.00% | $100,000 |
Percentage is based on your RRIF balance on January 1 each year.
Can You Withdraw More?
Yes! The minimum is just that—a minimum. You can withdraw more anytime, but:
- All withdrawals are taxable income
- Large withdrawals can push you into a higher tax bracket
- May trigger OAS clawback if income exceeds ~$90,000
What is a LIF?
A Life Income Fund (LIF) is similar to a RRIF, but for locked-in pension money (like from an employer pension plan). Key differences:
Minimum withdrawal: Same as RRIF
Maximum withdrawal: LIFs have a cap (varies by province)
Purpose: Ensure your pension money lasts your lifetime
RRIF Tax Strategies
1. Use Your Spouse's Age
If your spouse is younger, you can base minimum withdrawals on their age for lower rates.
2. Pension Income Splitting
After age 65, you can split RRIF income with your spouse to reduce taxes.
3. Withdraw Early (Before 71)
Convert part of your RRSP to a RRIF at 65 to qualify for pension income credit ($2,000 tax-free).
4. Watch OAS Clawback
Keep total income under ~$90,000 to avoid losing Old Age Security benefits.
What Happens When You Die?
Your RRIF doesn't disappear—it passes to your beneficiaries:
- Spouse: Can roll it into their own RRSP/RRIF tax-free
- Financially dependent child/grandchild: May qualify for tax-deferred rollover
- Other beneficiaries: Full value is taxable as income in the year of death
💡 Pro tip: Name your spouse as successor annuitant (not just beneficiary) for seamless transfer.
Bottom Line
RRIFs are the natural next step after your RRSP. They give you flexibility to manage retirement income while keeping your investments growing. Plan your withdrawals carefully to minimize taxes and maximize your retirement income.