Registered Retirement Income Funds

Take a SmartStep and keep control of your Retirement funds

A Registered Retirement Income Fund is one of the options that RRSP account holders face once they turn 71 and RRSP plans are forced to close. An RRSP holder has 2 other choices; withdraw everything as cash. If there is a large balance, the tax cost could be huge or you can convert the RRSP into an annuity. This will allow the RRSP holder to receive a set monthly payment, based on their RRSP balance, until death.

The most popular option is to convert the RRSP into a RRIF. This will allow the investments to continue to grow tax free and is subject to a required annual withdrawal schedule that increases as the account holder gets older. A RRIF may be set up at Comtech Fire as a savings or term deposit account and may also be held in mutual funds*.

It is important to note that you can convert your RRSPs to a RRIF before the age of 71, as early as 55.

How does a RRIF work?

Set up

  • Decide what type of RRIF you want; savings, term deposits or mutual funds*
  • Plan your withdrawals ensuring that you take out the required minimum amount on either an annual, quarterly or monthly basis
  • Choose a beneficiary; if you don’t more of your money will go to the government in taxes
  • Contact your Comtech Fire branch or Financial Service Officer for information and advice on the best options for you

Withdrawals

  • You must withdraw a minimum amount each year, starting after the year in which your RRIF is established
  • The minimum is a percentage set by the federal government, which increases with age
  • There is no maximum withdrawal amount; you may withdraw any or all funds at anytime
  • You may elect to use your spouse’s age in determining the minimum payment calculation. This must be done prior to income commencement and cannot be reversed.
  • If you have ongoing savings needs, you can now invest up to $5,000 of your RRIF income annually in a Tax Free Savings Account. The investment income earned in the Tax Free Savings Account will not affect your Guaranteed Income Supplement. Currently, income earned on non-registered investments is used to calculate eligibility for federal income-tested benefits and credits. The income earned, or the funds withdrawn from your Tax Free Savings Account will not affect your eligibility for federal income-tested benefits and credits, such as Old Age Security Benefits, Canada Child Tax Benefit, or Employment Insurance.

Taxation

  • Tax is only paid on the money withdrawn
  • Since RRIF withdrawals are considered to be pension income, RRIF income is eligible for income splitting with a spouse. This may result in lower overall family taxation providing the other spouse has lower income.
  • Upon death, 100% of the income from a RRIF can be;
    • paid to the surviving spouse or common-law partner
    • the balance can be transferred tax-free to the spouse or common-law partner’s RRIF or RRSP
    • the balance may be transferred to a financially dependent child or grandchild

Additional Benefits

  • Variety of options to choose from and the flexibility to control your funds
  • Comtech Fire’s Registered Retirement Income Fund plans, provided they are invested in savings accounts or term deposits, are fully insured by the Deposit Insurance Corporation of Ontario.

* Securities are offered through Qtrade Advisor, a division of Qtrade Securities Inc., Member of the Canadian Investor Protection Fund.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated.
 

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