A Registered Retirement Income Fund (RRIF) is a tax-deferred retirement plan under Canadian tax law. Individuals use an RRIF to generate income from the savings accumulated under their Registered Retirement Savings Plan. As with an RRSP, an RRIF account is registered with the Canada Revenue Agency.
RRIFs and RRSPs are similar in numerous aspects. They are both government regulated, both offer multiple investment options, and both allow for tax-deferred growth.
That being said, important differences include the fact that you cannot make a contribution to a RRIF, and a predetermined minimum amount of funds must be withdrawn as taxable income every year. On the other hand, withdrawals from a RRSP are not mandatory and do not count as qualifying pension income at age 65 and on. This means RRSP withdrawals cannot be split to a spouse like RRIF withdrawals can, and will not attract the pension income credit either.
Once your RRIF is opened, a minimum annual payment must be taken by the end of the following calendar year, and every year thereafter. The minimum amount could be calculated here. Earnings in a RRIF remain tax-free as they were in the RRSP, and only the amounts paid out of a RRIF each year are taxable.
By the year that you turn 71, your RRSP account must be converted to a RRIF. In many circumstances it makes financial sense to convert your RRSP to a RRIF sooner.
Your RRIF account could be set up through one of the following financial institutions: