Your registered retirement savings plan (RRSP) matures when you turn 71 years of age. That means by December 31 of the year you turn 71, you must close out your RRSP.
You can withdraw the RRSP funds as a lump-sum payment or transfer them to an annuity, but most people choose to roll their RRSP into a registered retirement income fund (RRIF), an account type designed to pay regular income to its holder.
Get a Qtrade RRIF working for you.
A RRIF is a registered, tax-deferred financial product, just like an RRSP. But while RRSPs are designed for retirement savings, RRIFs are designed to provide retirement income. The investments in your RRIF continue to grow tax-free and withdrawals are treated as income for tax purposes. After you have opened a RRIF, you can transfer cash and investments from RRSPs, pooled registered pension plans (PRPPs) and registered pension plans (RPPs). Withdrawals begin the year after you open your RRIF and have an annual minimum that increases every year. If you choose to, you can also withdraw more than the minimum amount.
What are the benefits of a RRIF account?
RRIFs tend to be the most popular option because of the independence and flexibility they allow.
- You can carry on managing the same tax-sheltered investments that you had in your RRSP, including stocks, exchange-traded funds (ETFs), bonds, mutual funds, GICs, and cash.
- The government requires you to make a minimum annual withdrawal, which increases as you age, but you can choose to withdraw a larger amount.
What can I invest in within a RRIF?
Stocks, ETFs and more
Just like RRSPs, you can also choose the investments that make up your RRIF.
- You can buy and sell stocks, bonds, GICs, mutual funds, and exchange-traded funds (ETFs) in your RRIF.
- There are some rules that apply, however, regarding the exact nature of the investments held in a RRIF.
Your assets must be invested in what the Canadian Government calls “qualified investments” or there could be tax implications and penalties.
US stocks
Qtrade Direct Investing® also offers RRIFs in U.S. dollars.
- There are several advantages to these, especially if you hold a lot of U.S. stocks.
- Dividends are not subject to an automatic conversion into Canadian dollars (and the losses that come about with foreign exchange transactions).
- Any sales of U.S. stocks can remain in U.S. funds until new U.S. stocks are bought, rather than being transferred into Canadian currency.
What is a self-directed RRIF?
If you are knowledgeable about markets and their various assets—and if you have had a self-directed RRSP in the past—a self-directed RRIF could make sense.
- It gives you full freedom (within the Canadian Government’s rules) to control your RRIF portfolio and manage the assets within it.
- It allows you the flexibility to switch your investments at any time. It also permits you to respond quickly to any movements in the markets or changes to your personal needs.
Yes, Qtrade Direct Investing® offers RRIF accounts for self-directed investors. You can transfer your Qtrade RRSP account or RRSP assets from another provider into a Qtrade RRIF.
Read all about RRIFs in our Guide to registered retirement income funds.
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The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes, and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. Information, figures, and charts are summarized for illustrative purposes only and are subject to change without notice. All investments are subject to risk, including the possible loss of principal.
