Manage your savings and defer taxes in a RRIF

You must convert a RRSP to a retirement income option such as a RRIF by December 31 of the year that you turn 71. If you decide that you don't want to transfer your money from an RRSP to a RRIF, you could withdraw your RRSP as a lump sum amount that will be considered taxable income.

After opening a RRIF you are required to withdraw the annual minimum payment (AMP) each year. There is no maximum withdrawal limit. You could review the RRIF minimum payment schedule to determine your AMP percentage based on your age. The money in your RRIF is considered taxable income in the year that you withdraw it.

You could hold multiple RRIFs separately. However, you still need to withdraw the annual minimum payment (AMP) from each RRIF.

The key differences between the two accounts are that RRSPs focus on contributing money into your account regularly whereas RRIFs only allow you to withdraw money from the account and you cannot make contributions. A Registered Retirement Savings Plan (RRSP) allows you to save money for retirement and defers your taxes. A RRIF provides income during retirement through regular withdrawals of the savings from your RRSPs. Payments from a RRIF are considered taxable income so any withdrawals will be taxed.