AFTER AGE 71 By December 31 of the year you turn 71, you need to wind down your RRSP. You have two options: - Transferring the RRSP to a retirement income option like a RRIF (Registered Retirement Income Fund) — or,
- De-register all of the assets in the RRSP — the entire value of the assets withdrawn are treated as taxable income in the year withdrawn
A RRIF can be viewed as an extension of your RRSP. Your RRSP is used to save for your retirement, while a RRIF is used to withdraw income during your retirement – and, like an RRSP, a RRIF allows for tax-deferred growth, offers several investment options and is government-regulated. While withdrawals from an RRSP are optional, you must make mandatory minimum withdrawals from your RRIF each year according to a schedule based on your age. Excess withdrawals are subject to withholding tax. Although RRIF contributions are not allowed, you can still maximize RRSP contributions in the year you turn 71, including any unused contribution room from previous years. Just be sure to make these contributions in plenty of time to convert them to a retirement income option before year-end. After age 71, you can also contribute to a spousal RRSP if your spouse is 71 or younger on December 31 of the year you make the contribution. |