The RRSP is an accumulation account: deductible money goes in, and it grows there shielded from tax. But it is not designed to last forever. At a deadline set by law — the year its holder reaches the age limit in force — the RRSP must convert. Its most common destination is the RRIF: the Registered Retirement Income Fund.
How the turnaround works
The RRIF is the mirror of the RRSP:
- in an RRSP you contribute (and deduct); in a RRIF you no longer contribute;
- from an RRSP you withdraw if you want to; from a RRIF you withdraw because you have to — an annual minimum withdrawal is mandatory;
- in both, investments keep growing shielded from tax as long as they stay in the account.
The conversion itself is normally not a taxable event: the investments move from the RRSP to the RRIF with no forced sale and no immediate tax bill. It is the withdrawals that are taxed, as income, as they occur.
The minimum withdrawal
Each year, a minimum percentage of the RRIF balance must be withdrawn. That percentage is set by an official table and rises with age — the plan is built so that tax-deferred savings are eventually taxed, gradually. Withdrawing more than the minimum is allowed; withdrawing less is not.
A neutral worked example
Suppose a RRIF of $100,000 and a hypothetical minimum percentage of 5% for the year:
- The mandatory withdrawal for the year is $5,000.
- Those $5,000 are, as a general rule, added to that year's taxable income.
- The remaining $95,000 keep growing shielded from tax inside the account.
What this changes for your tracking
A RRIF is tracked like any portfolio: positions, transactions, return. The difference is the mandatory outflow — regular sales to fund the minimum withdrawal, which appear in the history as ordinary sales. The report's tax context reflects the nature of the account: withdrawals are taxable as a general rule, unlike a TFSA.
Challenge: check my understanding
Four questions wait behind an account: they check what you understood, and the state stays from one visit to the next.
Official sources
The conversion age limit, the table of minimum percentages and their application rules are set by the Canada Revenue Agency; these parameters change. Consult its publications — and your institution, which normally calculates your minimum for you — for the values in force. Quebec residents also report RRIF income to Revenu Québec.
- Canada Revenue Agency — RRIF: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-retirement-income-fund-rrif.html
Informative, general content — not personalized advice. For your situation: your institution or an advisor.