At the end of the year you turn 71, your RRSP matures and you must convert it to a Registered Retirement Income Fund. Each year, a minimum amount based on a percentage must be withdrawn from your RRIF. This is known as the RRIF minimum withdrawal rate. We’ve listed the minimum percentages by age below.
Minimum withdrawal payments are not required to begin until the following year in which the RRIF account was opened, meaning that your first withdrawal must be completed by December 31st of the year you turn 72.
What is my RRIF minimum withdrawal rate?
Your RRIF minimum payment withdrawal is pre-determined by a percentage of the market value of the RRIF on December 31st of the previous year. This minimum percentage has been established by the CRA and is detailed below. The withdrawal rate could be based on your age or the age of your spouse.
| Age At Start Of Year | RRIFs Set Up After The End Of 1992 |
|---|---|
| 65 | 4.00% |
| 66 | 4.17% |
| 67 | 4.35% |
| 68 | 4.55% |
| 69 | 4.76% |
| 70 | 5.00% |
| 71 | 5.28% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.67% |
| 75 | 5.82% |
| 76 | 5.98% |
| 77 | 6.17% |
| 78 | 6.36% |
| 79 | 6.58% |
| 80 | 6.82% |
| 81 | 7.08% |
| 82 | 7.38% |
| 83 | 7.71% |
| 84 | 8.08% |
| 85 | 8.51% |
| 86 | 8.99% |
| 87 | 9.55% |
| 88 | 10.21% |
| 89 | 10.99% |
| 90 | 11.92% |
| 91 | 13.06% |
| 92 | 14.49% |
| 93 | 16.34% |
| 94 | 18.79% |
| 95 and older | 20.00% |
The formula used to calculate the minimum withdrawal percentage is 1 ÷ (90 – Your Current Age)
RRIF Minimum Withdrawal Rate Calculation Example
Example: On January 1st, 2020, you were 72 years old. The value of your RRIF on December 31st, 2019 was $100,000. For 2020, your minimum RRIF payment is $5,400. Referring to the table above, at 72 years old, the RRIF minimum withdrawal rate is 5.4%. As you get older, the RRIF minimum withdrawal rate and amount gets larger.
RRIF Withdrawal Calculation Example Based on Spouses’s Age
Example: On January 1st, 2020, you were 72 years old but your spouse was 69 years old. The value of your RRIF on December 31st, 2019 was $100,000. For 2020, your minimum RRIF withdrawal is $4,760. As you get older, the minimum withdrawal amount gets larger.
Frequency of RRIF Payments
One of the decisions individuals have to make is how frequent they wish to have the minimum RRIF payment sent to them. The options are:
- Monthly
- Quarterly
- Semi-Annually
- Annually
Each individuals circumstances are unique and you would choose a frequency that would meet your needs.
What If You Don’t Need The Income?
If you aren’t in need of the income that a RRIF provides, you can do an in-kind withdrawal to your Non Registered Cash Account or TFSA. For example, say you’re holding 50 shares of RBC in your RRIF and you don’t wish to sell them to cover your RRIF payment. You can transfer these 50 shares in-kind to your Non-Registered Account or TFSA, as part of the minimum withdrawal. Your shares stay invested and you’ve satisfied the requirement of withdrawing the minimum from your RRIF.
If you don’t need the income from the RRIF, it’s recommended to elect an end of year annual frequency in order to maximize the tax-deferral benefits of the RRIF.
