Converting Your RRSP to a RRIF
For most Canadians, retirement marks the moment when your savings begin paying you. One of the biggest transitions comes when your Registered Retirement Savings Plan (RRSP) becomes a Registered Retirement Income Fund (RRIF). While the conversion itself is straightforward, the decisions you make around timing, withdrawal amounts, and tax strategy can have a lasting impact on your retirement income.
This guide outlines the key rules, tax considerations, and planning tactics to help you keep more in your pocket.
RRSP to RRIF Transfer Deadlines
You can convert an RRSP to a RRIF at any time, until December 31 of the year you turn 71. That date also marks the last day you can contribute to your own RRSP.
Once your RRIF is set up, there’s no minimum withdrawal required in the first calendar year. The required minimum begins on January 1 of the following year, based on a percentage of the market value of your RRIF on that date.
How RRIF Withdrawals Are Calculated
The Canada Revenue Agency (CRA) prescribes withdrawal percentages that rise with age. For example:
Age 65: 4.00%
Age 70: 5.00%
Age 71: 5.28%
Age 72: 5.40%
Age 80: 6.82%
Age 85: 8.51%
Age 95+: 20.00%
Your minimum withdrawal is based on your age (or your spouse’s age if you elect that option when you first open the RRIF). Choosing a younger spouse’s age can permanently reduce minimum withdrawals, which may be advantageous if you want to keep more invested and defer taxable income.
Understanding Tax on RRIF Withdrawals
Minimum withdrawals: No tax is withheld at source, but all withdrawals are fully taxable as income on your return.
Amounts above the minimum: Financial institutions must withhold tax at source. These are fixed rates mandated by the Canada Revenue Agency (CRA): 10% on amounts up to $5,000, 20% on amounts between $5,000 and $15,000, and 30% on amounts over $15,000 (outside Quebec). These withholding amounts are not necessarily your final tax bill; the actual amount owed will be determined when you file your return.
Planning tip: If you prefer to have tax withheld on your minimum withdrawals to avoid instalment surprises, most institutions will do so if you ask.
Pension Income Benefits After 65
Beginning the year you turn 65, RRIF withdrawals qualify as eligible pension income. That means you may benefit from:
Income splitting with a spouse or partner.
The $2,000 pension income credit, which can lower your overall tax bill.
These benefits often make it worthwhile to begin drawing modest RRIF income in your mid-60s, even if you don’t need the cash immediately.
OAS Clawback Explained
RRIF income counts toward your net income for Old Age Security (OAS). In 2025, the OAS recovery tax (clawback) begins at $93,454 and is fully phased out around $151,668 (age 65–74) and $157,490 (age 75+).
Strategic holistic income planning that takes considers all your income sources during retirement can help reduce the risk of large, forced withdrawals pushing you into clawback territory, or allow you to maximize government benefits through OAS deferral strategies.
Spousal RRIFs and Attribution Rules
If you convert a spousal RRSP into a spousal RRIF, the three-year attribution rule still applies. Any withdrawal above the minimum may be taxed back to the contributing spouse if contributions were made in the current or prior two years. Minimum withdrawals are never attributed.
How to Convert an RRSP to RRIF
While the idea of converting an RRSP to a RRIF can sound technical, the process itself is quite straightforward. The key is to plan ahead so you’re not rushed into decisions as your 71st birthday approaches. Working with your advisor can simplify the process and ensure each decision aligns with your broader retirement plan. Here’s how the transition typically works in practice:
Step 1: Decide Where to Hold Your RRIF
Most Canadians open their RRIF at the same financial institution where they already hold their RRSP. This makes it easy to transfer investments directly without needing to sell or move accounts. If you have multiple RRSPs, consolidating them into a single RRIF can simplify recordkeeping and withdrawals. Your advisor can help determine whether it makes sense to consolidate and where best to house the account.
Step 2: Complete the RRIF Application
Although a RRIF feels like a continuation of your RRSP, it is technically a new account. You’ll need to complete a formal application through your bank or wealth firm. This is usually straightforward, and your advisor or institution often prepares much of the paperwork for you.
Step 3: Elect Your Spouse’s Age (If Advantageous)
One key decision you must make when opening the account is whether to base your minimum withdrawals on your age or your spouse’s age. If your spouse is younger, using their age can reduce the required withdrawals for many years, keeping more money invested and helping to manage taxable income. This choice is irrevocable, so it’s important to weigh carefully before you sign.
Step 4: Name Your Beneficiaries
Like other registered accounts, your RRIF requires a beneficiary designation. Naming a spouse or common-law partner as a successor annuitant is often the smoothest option, as it allows the RRIF to continue seamlessly in their name. Alternatively, you can designate beneficiaries such as children, grandchildren, or your estate. Keep in mind that the tax treatment depends on who is named—spousal rollovers generally defer taxes, while other beneficiaries may face tax at the estate level.
Step 5: Set Up a Withdrawal Schedule
You must begin withdrawals the year after your RRIF is opened, but you have flexibility in how the payments are structured. You can choose monthly, quarterly, semi-annual, or annual withdrawals, and you can take them in cash or “in-kind” (transferring investments rather than selling them). The minimum amount is based on your January 1 balance and increases gradually as you age. There is no maximum—you can always withdraw more if you need to.
A quick note on HBP/LLP
Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP) repayments are RRSP rules. If you still have HBP/LLP obligations when converting, speak with your advisor—your repayment schedule and where you make repayments can affect tax. (See CRA’s HBP repayment guidance.)
Bottom line
Converting an RRSP to a RRIF is straightforward, but optimizing your approach requires strategy. Decisions about when to convert, whose age to elect, how much to withdraw, and how to coordinate across accounts can make a significant difference to your retirement income and tax efficiency.
If you’re approaching this milestone, now is the time to model scenarios with your advisor. A proactive plan ensures your savings not only last, but work as efficiently as possible in retirement.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult with qualified professionals before making RESP or estate planning decisions.
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