Registered Retirement Income Funds (RRIF)

This month, by request, we will focus on RRIFs. What is a RRIF? A RRIF is nothing more than an RRSP, registered retirement savings plan that is converted into an income fund. Anything you had your RRSP invested in you can have your RRIF invested in. We do recommend reviewing your investments when withdrawing an income. We like to suggest keeping some money liquid, in cash, to fund the RIF payments for one to two years. This is so we are not at the mercy of the markets and forced to sell at the wrong time, such as what happened in 2008-09.

Now some people believe that you cannot take out a RRIF until you are retired. This is simply not true. On both plans, you will often see only one R. This is because these plans are no longer just for retirement. So now you will see RSP or RIF. The word retirement has been taken out. Both RRIF and RIF are used interchangeably.

There are many reasons why someone would want to convert their RSP early into a RIF. It could happen when a person is in between jobs and needs an income; a parent decides to take time off work for raising children; you want to take time off and travel the world. Whatever the reason, you just need to know there is no age restriction.

You do not even have to convert all of your RSP to a RIF. There are some advantages to doing only part of your plan. There are no rules to say when the money can be used with the exception at age 71. When a RSP is converted to a RIF and an income is no longer required, the RIF can also be transferred back to the RSP as long as you are still under 71 years old.

Regardless of needing extra income, if you are now 71, you must convert your RSP to a RIF. The government wants to start collecting back some of the taxes they allowed you to defer through the life of your RSP. For more information be sure to call your advisor to get all the answers to your RIF questions and concerns.