What is a Registered Retirement Income Fund (RRIF)?
A RRIF is a registered fund that is opened when you transfer funds from your RRSP. While it can happen earlier, often to take advantage of certain pension tax credits, you must close your RRSP by December 31st of the year you turn 71. RRIFs are a great alternative at that time. It sounds complicated but it's not.
How does a RRIF work?
- You transfer your funds from the RRSP to the RRIF, tax free, with help from your Libro Coach.
- Your RRIF generates retirement income at a rate you can control - which in turn manages the amount of tax you will pay on that income. Remember, your RRSP was only deferring taxes until you needed the money or turned 71. Time's up - but you can control the tap a little and your income can be low enough that the taxes you generate are low as well. In other words, spread it out. There are some minimum annual payments based on your age we’ll need to discuss.
- The money in your RRIF can be held in any of the investments you selected for your RRSP. Have a plan and be sure you understand exactly how the plan works.
- Your RRIF will trigger estate planning options, investment decisions and other financial choices. Make those choices from an informed point of view. Your Libro Coach knows this world and knows you - that's a tough combination to beat.
- Ask your Libro Coach to walk you through the RRIF calculator in person. You'll get to know the numbers and that leads to peace of mind.