Canadian Tax and
Financial Information
RRSP Conversion to RRIF

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RRSPs RRIFs and TFSAs -> Conversion of an RRSP to a RRIF

Converting Your RRSP to a RRIF

Income earned in a RRIF is not taxable while it remains in the RRIF, including interest, dividends and capital gains, so can grow tax free until the money is withdrawn.  There may be tax withheld from dividends received from some foreign investments, but not from dividends received from US corporations. See our article on which investments should be held inside vs outside an RRSP.

A Registered Retirement Savings Plan (RRSP) must be converted to a Registered Retirement Income Fund (RRIF) by the end of the year in which the owner turns 71.  RRIF owners are required to withdraw a minimum amount each year, starting the year after the RRIF is established.

In most cases, there is no advantage gained by converting your RRSP to a RRIF before the year in which you turn 65.  However, if you plan to make regular withdrawals from your RRSP before you turn 65, check to see if the fees charged by your financial institution would be less if the RRSP, or a portion of it, was converted to a RRIF.  These fees are not tax deductible.

When the time comes to convert your RRSP to a RRIF, it is not necessary to sell the investments in the RRSP - the investments can just be rolled over to a RRIF.  If you are doing this prior to age 71, a partial rollover can be done.

By converting some of your RRSP to a RRIF in the year you turn 65, you can take advantage of the pension income tax credit and pension income splitting with your spouse.  See our article on creating pension income.

If you have earned income and thus contribution room after age 71, you can make contributions to the RRSP of a spouse who is 71 or younger.

The RRSP/RRIF calculator will show you your minimum withdrawals, and will help you plan how much to withdraw annually from your RRSPs/RRIFs.

See also:

Using Age of Spouse to Calculate Minimum RRIF Withdrawals

Making "in kind" withdrawals from your RRSP or RRIF

Final RRSP Contribution Age 71 (excess contribution)

Tax Tip:  Convert some of your RRSP to a RRIF at age 65 in order to take advantage of the pension income tax credit and pension income splitting with your spouse.

Revised: January 30, 2018


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