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RRIF Tips And Hints

7 Savvy Moves for Your RRSP/RRIF

Here are 7 Strategies that could help you bring home more of the money in your Registered Retirement Income Fund (RRIF):

  1. Max out your Registered Retirement Savings Plan (RRSP)

Before the end of the year you turn 71, make your final RRSP contribution—and make it as large as you can. Keep in mind, you don't have until March of the following year—you have to make the contribution by December 31.

  1. Put money towards your spouse's RRSP

If your spouse/partner is under 71 and you have contribution room in your RRSP, you can continue to contribute to his or her plan until December 31 of the year they turn 71.

  1. Avoid taking money out too early (or more than you need)

Since RRIF withdrawals count towards your income and may place you in a higher marginal tax bracket, avoid taking money out before you need it—or taking more than you need. Also remember that once you withdraw the money, it can't grow tax-deferred.

Tip: You can hold off on taking money from your RRIF until the end of the year you set up the account.

  1. Younger spouse? Consider basing withdrawals on his or her age

If your spouse/partner is younger, you can base your RRIF withdrawals on his or her age to lower your minimum payment and enjoy tax-deferred growth on your investments for longer.

Try the RRIF Calculator to estimate your withdrawal now.

  1. Contribute extra cash from your RRIF to your TFSA

If you don't need your full RRIF withdrawal, you can contribute the excess to a Tax-Free Savings Account (TFSA) where your funds can potentially continue growing tax-free (assuming you have TFSA contribution room).

A TFSA is a great way to invest for tax-free income when you're no longer able to save in an RRSP. You don't need to earn any income to contribute and you don't have to stop adding to it at a certain age.

  • Unlike RRIF withdrawals, TFSA withdrawals are tax-free. If you have non-registered accounts, you may be able to move some of these funds into a TFSA and reduce your taxable income (there may be tax consequences).
  • Income you earn in your TFSA and withdrawals from it do not affect your eligibility for government benefits, including Old Age Security and the Guaranteed Income Supplement, or tax credits such as the Age Credit.
  1. Choose the right investments for your RRIF

You can hold a variety of investments in your RRIF to meet your needs in retirement. Investments such as Guaranteed Investment Certificates (GICs) let you withdraw funds in the short-term while mutual funds and equities offer the opportunity for your savings to keep growing.

When you convert your RRSP to a RRIF, the investments in your RRSP can transfer directly to your RRIF. You don't have to make any changes to them unless you want to.

  1. Protect your government benefits.

Your taxable income (including RRIF withdrawals) can impact your eligibility for certain government benefits, such as Old Age Security. Too much income could mean a reduction of some of these benefits, so be sure to carefully plan the timing and amount of your RRIF withdrawals.

See How Do I Know When to Take My CPP/QPP?

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