Turning your RRSP into a RRIF

Topic: Retirement · Part 9 of 13 · 🔴 Advanced

In one sentence

Your RRSP cannot stay an RRSP forever, so this post explains what you must do with it by the end of the year you turn 71, and how the RRIF that most people choose pays you an income.

Words to know

RRSP (Registered Retirement Savings Plan): an account where you save for retirement. You get a tax deduction when you put money in, and you pay tax when you take it out.
RRIF (Registered Retirement Income Fund): the “paying out” version of an RRSP. Your investments can stay the same, but now you must take some money out every year.
Annuity: a contract, usually with an insurance company. You give it a lump sum, and it pays you a fixed income, often for life.
Minimum amount: the smallest amount the law says you must take out of your RRIF each year.
Withholding tax: tax your financial institution takes off a withdrawal and sends to the CRA for you. It is a prepayment, not always your final tax.

Step 1: Know your deadline

The CRA says that December 31 of the year you turn 71 is the last day you can contribute to your RRSP. In that same year, you must choose what happens to your RRSP. If you do nothing, the full amount can be paid out to you as income and taxed in one year. That can mean a very large tax bill.

You do not have to wait until 71. Many people convert earlier, for example when they stop working. Your financial institution can tell you its own paperwork deadline, which is often a few weeks before December 31.

Step 2: Compare your three options

Move it to a RRIF. No tax is withheld on the transfer. Your money keeps growing tax-deferred, and you take out at least the minimum each year. This is the most common choice. Pros: flexible, you keep control of investments. Cons: the money can run out if withdrawals are high or markets fall.
Buy an annuity. No tax is withheld on the purchase. You get a steady payment, often for life. Pros: predictable, no investment decisions. Cons: usually you can’t get the lump sum back, and the payment depends on interest rates when you buy.
Take it as cash. The whole amount is taxable income that year, and tax is withheld. This usually fits only small RRSPs.

You can also mix them. For example, part RRIF and part annuity.

Step 3: Understand the minimum withdrawal

There is no minimum in the year you open the RRIF. From the next year, you must take out at least a set percentage of the RRIF’s value on January 1. The percentage depends on your age on January 1.

Under 71: the factor is 1 ÷ (90 − your age). At 65, that is 1 ÷ 25 = 4%.
71 and over: the CRA uses a fixed table. Some values are below.

Age on January 1	Minimum withdrawal
71	5.28%
72	5.40%
73	5.53%
75	5.82%
80	6.82%
85	8.51%
90	11.92%
95 and over	20.00%

Checked October 2026 on canada.ca (CRA). The full table has a value for every age.

The minimum is a floor, not a ceiling. You can always take out more.

Step 4: Decide whether to use a younger spouse’s age

If your spouse or common-law partner is younger, you can choose to base the minimum on their age. A younger age means a smaller minimum, so more money stays tax-deferred. You must choose this before you receive any payment from the RRIF. Once chosen, it cannot be changed, even if your spouse dies.

This helps if you don’t need the income yet. It doesn’t help if you plan to take more than the minimum anyway.

Step 5: Plan for withholding tax and credits

The minimum amount has no tax withheld by default. Anything above the minimum does. Outside Quebec, the rates on the extra amount are:

10% on amounts up to $5,000
20% on amounts over $5,000, up to $15,000
30% on amounts over $15,000

In Quebec, the federal rates are 5%, 10% and 15%, and Quebec withholds its own tax too. All RRIF income is still taxable on your return. If too little was withheld, you pay the difference in April. You can ask your institution to withhold more, so there is no surprise.

Two tax helpers for people 65 and over:

Pension income amount: a federal tax credit on up to $2,000 of eligible pension income. RRIF payments qualify from age 65. Provinces have their own amounts.
Pension income splitting: you can move up to 50% of eligible pension income to your spouse’s return. RRIF income qualifies if you are 65 or older by the end of the year. You both sign Form T1032 and file it with both returns. CPP and OAS don’t qualify for this.

Example

Assume your RRIF is worth $200,000 on January 1. You live outside Quebec.

You are 65: factor 1 ÷ (90 − 65) = 1 ÷ 25 = 4%. Minimum: $200,000 × 4% = $8,000.
You are 72: factor 5.40%. Minimum: $200,000 × 5.40% = $10,800.
You are 72, but you chose your spouse’s age (66) at the start: factor 1 ÷ (90 − 66) = 1 ÷ 24. Minimum: $200,000 ÷ 24 = about $8,333.
Withholding: at 72 you take $15,800. That is $5,000 more than the $10,800 minimum. Withholding: $5,000 × 10% = $500. You receive $15,300, and the full $15,800 goes on your tax return.

Common mistakes

Missing the year-you-turn-71 deadline, so the whole RRSP becomes taxable in one year.
Thinking withholding tax is your final tax. Your real tax depends on your total income.
Forgetting to choose a younger spouse’s age before the first payment, when you wanted smaller minimums.
Keeping RRIF investments too risky or too safe for money you will need in the next few years.

✅ My checklist

☐ I know the year I turn 71 and my institution’s paperwork deadline
☐ I compared a RRIF, an annuity and cash for my situation
☐ I decided whether to use my spouse’s age before the first payment
☐ I know my yearly minimum and how much tax will be withheld
☐ I asked whether pension income splitting could help us

Next in this topic → Part 10: Which money to use first in retirement (and the taxes)

Back to the topic → Retirement

There are no affiliate or referral links in this post. This is general information, not financial, tax or legal advice; everyone’s situation is different. Figures were checked in October 2026 and can change.

Sources: CRA: RRSP options when you turn 71 · CRA: Options for your own RRSPs · CRA: RRIF minimum withdrawal factors · CRA: IC78-18R7 Registered Retirement Income Funds · CRA: Tax rates on withdrawals · CRA: Line 31400 Pension income amount · CRA: Pension income splitting