Once your RRSP converts to a RRIF, you must withdraw a minimum amount each year — calculated as a percentage of your RRIF’s value at the start of each year. These percentages increase with age, the withdrawals are fully taxable as income, and they continue for as long as the RRIF exists.

How RRIF Minimum Withdrawals Are Calculated

The minimum withdrawal is calculated by multiplying your RRIF balance at January 1 of the current year by the applicable factor for your age.

Example: A RRIF valued at $500,000 at January 1 when you are age 75 requires a minimum withdrawal of $500,000 × 5.82% = $29,100 for that year. If you converted your RRSP to a RRIF in the year you turn 71, no minimum withdrawal is required for that calendar year.

Using Your Spouse’s Age to Lower the Minimum

If your spouse or common-law partner is younger than you, you can elect at the time of RRIF setup to base your minimum withdrawals on their age rather than yours. This election is irrevocable — it must be made when the RRIF is established and cannot be changed afterward.

The Tax Reality of RRIF Withdrawals

Every dollar withdrawn from a RRIF is added to your taxable income for that year at your marginal tax rate. There is no preferential treatment.

Bracket Stacking

As RRIF minimums increase with age, they stack on top of CPP, OAS, and any other income. A retiree who is comfortably below a threshold at age 72 may find themselves above the OAS clawback threshold by age 80, simply because the mandatory percentage has grown.

Withholding Tax

When you withdraw more than the annual minimum, financial institutions are required to withhold tax at source — 10% on amounts up to $5,000 above the minimum, 20% on amounts $5,001 to $15,000 above, and 30% on amounts above $15,000.

Strategies to Manage RRIF Tax Impact

Draw Down Your RRSP Before Age 71

The smaller your RRIF balance at conversion, the smaller the mandatory withdrawals and the lower the annual tax they generate.

Withdraw More Than the Minimum in Low-Income Years

If your income is unusually low in a given year, withdrawing above the RRIF minimum at a lower marginal rate can reduce the balance that generates minimums in future higher-income years.

Convert Part of Your RRSP at 65

Converting a portion of your RRSP to a RRIF at 65 allows you to access the pension income tax credit — up to $2,000 of eligible pension income at a 15% federal credit rate — while keeping the remainder growing in the RRSP.

What Happens to Your RRIF at Death

If your spouse is named as successor annuitant, they take over the RRIF without tax being triggered. If anyone else is the beneficiary, the full fair market value of the RRIF is included in your income in the year of death and taxed at the applicable rate.

Key Takeaways

• RRIF minimum withdrawals are mandatory annually, calculated as a percentage of the January 1 balance
• The percentage increases with age — from 5.28% at 71 to 20% at 95 and older
• All RRIF withdrawals are fully taxable as income in the year they are taken
• Using a younger spouse’s age for the minimum calculation reduces required withdrawals
• RRSP drawdown before age 71 reduces the RRIF balance and future mandatory withdrawals
• RRIF beneficiary designation has major tax consequences — successor annuitant is the most efficient outcome for a surviving spouse

This article provides general financial education for Canadians. It is not personalized financial advice. For guidance specific to your situation, consider speaking with a CFP® professional.