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Converting Your RRSP to a RRIF: Process and Planning

Learn how to convert your RRSP into a RRIF, what the rules are, and how it fits into your retirement income plan

Your RRSP is designed to help you accumulate retirement savings, but eventually, those savings need to be turned into income. This is where the Registered Retirement Income Fund (RRIF) comes in. Converting your RRSP into a RRIF is the most common way Canadians begin drawing down their retirement savings in a tax-efficient and structured manner.

Understanding how RRIF conversions work, when they’re required, and how withdrawals are taxed is essential for planning a smooth transition from saving to spending.

What Is a RRIF and Why Do You Need One?

A RRIF is essentially a continuation of your RRSP, but with an important difference: instead of contributing, you begin withdrawing. The tax-deferred status of your investments continues inside the RRIF, but you are required to take minimum withdrawals each year.

While an RRSP helps you save, a RRIF is designed to provide a predictable stream of retirement income. It offers flexibility in how and when you take withdrawals above the minimums, allowing you to manage your cash flow and taxes.

When You Must Convert Your RRSP to a RRIF

By law, you are required to close your RRSP by December 31 of the year you turn 71. At that point, you have three options:

  • Convert your RRSP to a RRIF (the most common choice).

  • Purchase an annuity to provide guaranteed lifetime income.

  • Withdraw the entire RRSP balance as a lump sum, which would be fully taxable in that year.

Note: For most retirees, converting to a RRIF is the preferred option because it allows for continued investment growth and flexible income withdrawals, while managing tax impacts over time.

How RRIF Withdrawals Work: Minimums and Taxation

Once your RRSP is converted to a RRIF, you must start taking mandatory minimum withdrawals each year. The minimum is calculated as a percentage of your RRIF balance at the start of each year, increasing with age.

Age at Start of Year Minimum Withdrawal Rate
71 5.28%
72 5.40%
73 5.53%
74 5.67%
75 5.82%
80 6.82%
85 8.51%
90 11.92%
95+ 20.00%

Optimize helps you plan these withdrawals to minimize tax impacts and align with your retirement income needs.

Advantages of Using a RRIF for Retirement Income

Converting your RRSP into a RRIF offers several benefits:

  • Continued tax-deferred investment growth on the remaining RRIF balance.

  • Control over withdrawal amounts above the minimum, offering income flexibility.

  • Ability to manage taxable income by coordinating RRIF withdrawals with other sources like CPP, OAS, or non-registered investments.

  • Income splitting opportunities with a spouse, reducing overall household tax burden.

At Optimize, we build RRIF strategies that fit seamlessly into your broader retirement income plan, ensuring all income sources work together efficiently.

How Optimize Helps You Transition from RRSP to RRIF

Turning your RRSP into retirement income is more than a formality—it’s a strategic shift that requires careful planning. Optimize helps you navigate this transition by:

  • Advising on the optimal timing for your RRIF conversion, ensuring compliance and tax efficiency.

  • Calculating your required minimum withdrawals and projecting their tax impacts.

  • Coordinating RRIF withdrawals with other income sources, smoothing out your retirement cash flow.

  • Identifying income-splitting opportunities to reduce household taxes.

  • Monitoring your RRIF strategy annually, adjusting as your needs and tax situation evolve.

With Optimize, your RRSP-to-RRIF conversion becomes a well-planned, tax-smart step toward a secure and flexible retirement.