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Financial Advisor


    Improve Your Financial Knowledge - Part 18

    59. Registered Retirement Income Fund (RRIF)

    In the year that an investor turns 71 years of age, their RRSP matures and the investor must choose one of the following conversion options:

    1. De-register the RRSP and receive a lump-sum cash payment

    2. Purchase an annuity

    3. Convert the RRSP into a Registered Retirement Income Fund (RRIF)


    Registered Retirement Income Fund (RRIF)

    RRIF is essentially the mirror opposite of an RRSP.

    RRSP is used to save money for retirement, a RRIF is used to withdraw the money accumulated.

    An individual can open a plan before they turn 71.

    A minimum amount, under the Tax Act, must be withdrawn from the RRIF.


    Registered Retirement Income Fund (RRIF)

    No Contribution Permitted * No Tax Deduction * Tax Deferred * Withdrawals from the RRIF are Taxable * No Government Incentives * Minimum Withdrawal * No Maximum Withdrawal


    60. Locked-in RRSPs (LRSP) and Locked-in Retirement Accounts (LIRA)

    When an employee leave their employer before retirement, s/he has the following options:

    * Forfeit the employer contributions and receive their own contributions plus any investment earnings on those deposits.

    * Leave their money in the pension plan and collect a pension when they reach normal retirement age (often 65).

    * May be able to transfer his or her money to the new employer’s RPP.

    * If under age 55, they may be able to transfer the pension benefits to LRSP or LIRA.


    LRSPs and LIRAs:

    * Deposits can only come from a transfer of assets from an RPP * No contributions permitted * Withdrawals are restricted * No tax deduction * Tax deferred * Taxable withdrawals * No Government incentive


    In the year that the plan holder turns 71 years of age, s/he must choose:

    1. Purchase a registered life annuity

    2. Transfer the plan to a Life Income Fund (LIF)

    3. Transfer the plan to a Locked-in Retirement Income Fund (LRIF)

    4. Transfer the plan to a Prescribed Retirement Income Fund (PRIF)


    Prince Edward Island (PEI) has no locking provision with respect to pension plans. In other words, there is no restriction placed on withdrawal amounts for pension plans that are administered according to the Pension Act in the province of PEI.


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