RRSP to RRIF Conversion: The Complete Guide to Deadlines, Minimum Withdrawals and Taxes
What every Canadian needs to know about turning an RRSP into a RRIF - the mandatory age-71 deadline, how minimum withdrawal percentages climb with age, how RRIF income is taxed, and the timing choices that shape retirement cash flow.
Why the RRSP-to-RRIF Conversion Is a Turning Point
For most of your working life, an RRSP is a one-way street: money goes in, grows on a tax-deferred basis, and mostly stays out of sight. At some point, the CRA requires that tax-deferred pool to start converting into taxable income. For the large majority of Canadians, a Registered Retirement Income Fund (RRIF) is the vehicle that makes this happen, and understanding the deadline, the withdrawal rules and the tax treatment can make a meaningful difference to how far your retirement savings stretch.
The Mandatory Conversion Deadline
The CRA requires that an RRSP be wound up by December 31 of the year in which the account holder turns 71. By that date, the RRSP must become one of three things: a RRIF, an eligible annuity, or a lump-sum cash withdrawal, which is fully taxable in the year it is received. For most retirees who want to keep the remaining balance invested and draw a flexible income, converting to a RRIF is the most common route. There is no minimum age to convert earlier than 71 - a RRIF can be opened at any age - though there is rarely a reason to do so well ahead of retirement, since once a RRIF is open, minimum withdrawals become mandatory.
How the Minimum Withdrawal Percentage Rises With Age
- Age 65: approximately 4.00% of the RRIF value
- Age 70: approximately 5.00%
- Age 71: approximately 5.28%
- Age 72: approximately 5.40%
- Age 75: approximately 5.82%
- Age 80: approximately 6.82%
- Age 85: approximately 8.51%
- Age 90: approximately 11.92%
- Age 95 and older: 20.00%
Two features of this schedule are worth remembering. First, there is no mandatory withdrawal in the calendar year the RRIF is first opened - the minimum kicks in starting the following year. Second, the dollar amount you must withdraw is recalculated every January 1 by applying that year's percentage to the RRIF's value on that date, so the actual dollar minimum can rise or fall with market performance even as the percentage itself keeps climbing with age.
Tax Treatment and Timing Strategy
Every RRIF withdrawal is fully taxable as ordinary income in the year received. Withholding tax at source generally only applies to amounts withdrawn above the CRA-mandated minimum for that year, which means retirees who take only the minimum may still owe additional tax when they file. On the upside, once you reach age 65, RRIF income qualifies for the federal pension income tax credit and for pension income splitting with a spouse or common-law partner, two benefits that RRSP withdrawals do not receive. This is one reason some retirees choose to convert at least a portion of their RRSP to a RRIF at 65 rather than waiting for the age-71 deadline, spreading withdrawals over more years and potentially smoothing out their tax bracket over a longer retirement.
Turn Your RRSP Into a Retirement Income Plan
A RRIF conversion affects your tax bracket, your OAS eligibility and your household cash flow all at once. Book a free, no-obligation consultation with the DMPG Financial Advisory Team to build a withdrawal strategy that fits your full retirement picture.
Frequently Asked Questions
At what age do I have to convert my RRSP to a RRIF?
The CRA requires that every RRSP be converted into a RRIF, an eligible annuity, or fully cashed out by December 31 of the year you turn 71. There is no way to keep contributing to or holding an RRSP past that year.
Do I have to withdraw money from my RRIF in the year I open it?
No. The CRA does not require a minimum withdrawal in the calendar year a RRIF is first set up. The first mandatory minimum withdrawal applies starting the following calendar year.
Is there a maximum amount I can withdraw from a RRIF?
No, there is no maximum. You can withdraw the mandatory minimum, more than the minimum, or the entire balance at any time; withdrawals above the annual minimum generally have withholding tax deducted at source.
How is RRIF income taxed compared to RRSP withdrawals?
Both are fully taxable as ordinary income in the year received, but RRIF income has an advantage: once you turn 65, it qualifies for the pension income tax credit and for pension income splitting with a spouse, which RRSP withdrawals do not.
Can I convert only part of my RRSP to a RRIF?
Yes. You can convert a portion of your RRSP to a RRIF while leaving the rest as an RRSP (as long as you are not yet 71), and some people even hold multiple RRIFs to manage withholding tax on withdrawals of different sizes.
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