RRIF — convert your RRSP to retirement income
Registered Retirement Income Funds
Section 146.3 establishes the rules for Registered Retirement Income Funds (RRIFs). By the end of the year you turn 71, you must convert your RRSP to a RRIF (or annuity) and begin withdrawing a minimum amount each year.
Plain-language explanation
Section 146.3 governs Registered Retirement Income Funds (RRIFs). A RRIF is the mechanism by which your RRSP savings are converted into a retirement income stream. You must collapse your RRSP by the end of the year you turn 71.
Converting to a RRIF: You can convert your RRSP to a RRIF at any age, but no later than December 31 of the year you turn 71. There is no immediate tax consequence — it is a tax-free rollover. Unlike an RRSP, you cannot make new contributions to a RRIF.
Minimum annual withdrawals: You must withdraw a minimum amount each year starting in the year after the RRIF is established. The minimum is a percentage of the RRIF's January 1 fair market value. The percentage increases with age: at age 72 it is approximately 5.40%, rising to 20% at age 95+. You can always withdraw more than the minimum.
Taxation: All RRIF withdrawals are fully included in income as pension income (s.56(1)(t)). Minimum withdrawals qualify for the pension income amount tax credit (s.118(3)) once you are 65 or older. Withdrawals can be "split" with a spouse under pension income splitting for significant tax savings.
Spousal RRIF: If you contributed to a spousal RRSP, the RRIF is a "spousal RRIF." Attribution rules (similar to spousal RRSP) apply for three calendar years after a contribution — withdrawals above the minimum are attributed back to the contributing spouse.
Example
At age 72, Robert has a RRIF with a January 1 value of $500,000. The minimum withdrawal percentage is 5.40%, so he must withdraw at least $27,000. He withdraws $40,000 — the full $40,000 is included in his income. He claims the pension income credit and splits half the income with his wife under s.60.03.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
Budget 2015 reduced minimum RRIF withdrawal rates for ages 71–94 by approximately 25% to better align with longer life expectancies and lower real investment returns.
Common questions
What happens if I die with money in a RRIF? +
On death, the full FMV of the RRIF is included in the deceased's income for the year of death — unless you named your spouse or a financially dependent child/grandchild as beneficiary. A spouse beneficiary can roll the RRIF into their own RRIF/RRSP tax-free.
Can I reduce RRIF withdrawals in a down market? +
You cannot go below the mandatory minimum, but you can reduce withdrawals to the minimum. In a down market, the minimum is calculated on the January 1 FMV — so a market drop during the year does not reduce the current year's minimum. You can elect to use your spouse's age for the minimum calculation if they are younger, which reduces the minimum.
Key terms
Related sections
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 146.3. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.