Registered Retirement Income Funds (RRIFs)

 

NOTE: Government changes to RRSPs and RRIFs

Recently, the federal government approved a change under Bill C-52 to the maturity age of a Registered Retirement Saving Plan (RRSP). With this change, you now have until December 31 of the year you turn 71 (previously 69) to convert to a plan that allows you to draw on the money you saved in your RRSP. Typically, RRSPs are converted to Registered Retirement Income Funds (RRIFs).

Members who are 69, 70 or 71 and have a RRIF have some important options to consider with this change. To learn more about these important options, click here.

 

What is a RRIF?

Like your RRSP, a RRIF is registered with the Canadian Government. A RRIF is basically the reverse of your RRSP. Instead of putting money in during the year, you will withdraw it as an income source at regular intervals throughout the year.

A regular minimum payment is withdrawn from your RRIF annually and is determined according to a schedule set by the Federal Government. You can also withdraw more than the minimum payment if you wish.

 

Benefits of RRIFs

RRIFs are by far the most popular retirement income vehicles. The benefits of RRIFs include:

• Growth - the interest you earn is tax deferred until you withdraw your money
• Flexibility and control - you choose how your money is invested and choose an income plan that suits your needs and goals
• Create your own personal pension plan

There are a number of factors to consider when deciding to open a RRIF. The frequency of income payments, whether or not to take a lump sum payment and the tax implications all need to be thought through carefully. Converting your RRSP to a RRIF is a very important financial decision. FirstOntario understands this and can offer you the tools and advice to make the decision that fits your retirement goals. Come talk to us today.

 

What if I want to withdraw more than the regular minimum payment?

You can withdraw more than the regular minimum payment at any time if you wish. However, tax is deducted on any amount withdrawn in excess of the minimum. At any time, you may decrease the withdrawal amount as long as the total withdrawal amount does not fall below the minimum amount.

 

How often can I get my RRIF payments?

FirstOntario Credit Union offers flexible payment options to suit individual needs. They include monthly, quarterly, semi-annual and annual RRIF payments on the 15th or month end.

 

How do I set up a RRIF?

Setting up your RRIF is an important step in your retirement income planning. We suggest making an appointment with a FirstOntario Member Consultant who can share the options available to you when setting up a RRIF. To learn more about RRIFs, the Learning Centre offers more information. Choose GO Figure on the left.