Registered Retirement Income Fund (RRIF) in Canada

A Registered Retirement Income Fund (RRIF) is a registered retirement plan designed to provide income during retirement. Individuals can transfer savings from an RRSP to a RRIF and receive regular payments during their retirement years.

RRIF withdrawals are generally taxable in the year they are received. Once minimum withdrawal rules apply, the RRIF holder must withdraw at least the required minimum amount each year. The holder can also choose to withdraw more than the minimum.

What Is a Registered Retirement Income Fund (RRIF)?

A RRIF provides an alternative to receiving retirement savings as a lump-sum payment or purchasing an annuity when an RRSP matures.

The funds held in a RRIF remain subject to rules concerning investments. In general, the same restrictions that apply to RRSPs regarding non-qualified investments also apply to RRIFs.

RRIF Minimum Withdrawals

RRIF holders are required to withdraw a minimum amount from their RRIF each year once the minimum withdrawal rules apply. The minimum amount is calculated using prescribed factors based generally on the holder's age and the value of the RRIF.

A taxpayer may choose to withdraw more than the required minimum. Any amount withdrawn above the minimum is referred to as an excess amount.

Taxable RRIF Amounts

Amounts received by a taxpayer as an annuitant under a RRIF are generally taxable. The total taxable amount is reported on the T4RIF slip issued by the financial institution.

T4RIF Box	Description	Tax Return Line
Box 16	Total taxable RRIF income	Line 11500
Box 24	Excess amount received	Included in Box 16 and reported on Line 11500
Box 18	Fair market value at death	Line 13000
Box 20	Amount deemed received on deregistration	Line 11500 or 13000, depending on the type of income
Box 22	Other income or deductions	Line 13000 or Line 23200

What Is an Excess RRIF Amount?

An excess amount is any amount withdrawn from a RRIF above the required minimum withdrawal.

For example, if the minimum RRIF withdrawal is $10,000 and the taxpayer withdraws $15,000, the additional $5,000 is considered an excess amount.

The excess amount is shown separately in Box 24 of the T4RIF slip. However, it is already included in the total amount reported in Box 16 and is therefore included on Line 11500 of the Income Tax and Benefit Return.

RRIFs and the Death of the Annuitant

When a RRIF annuitant dies, the fair market value (FMV) of the RRIF immediately before death is generally considered to have been received by the deceased before death.

The fair market value at the time of death is generally reported in Box 18 of the T4RIF slip and included on Line 13000 of the deceased person's final tax return.

Special rules may apply when the RRIF is transferred to a surviving spouse or common-law partner, dependent child, or dependent grandchild. In qualifying circumstances, some or all of the RRIF income may instead be reported by the beneficiary.

RRIF Losses After Death

If the value of an unmatured RRSP or RRIF decreases between the date of death and the date the remaining property is finally distributed to the beneficiary or estate, the decrease may qualify as a deduction on the deceased person's final tax return.

Tax Tip: If the value of a RRIF decreases after the holder's death and before the final distribution, check whether the decrease qualifies for a deduction on the deceased person's final return.

RRIF Benefits After Death

When a RRIF holder dies, the remaining benefits may be distributed to beneficiaries according to the terms of the plan and applicable estate arrangements.

If the benefits are inherited by a surviving spouse or common-law partner, special tax-deferred rules may allow the spouse or partner to receive or continue receiving payments. The spouse or partner will generally be taxed on amounts received from the RRIF.

If the RRIF benefits are inherited by someone other than a qualifying spouse or common-law partner, the fair market value of the RRIF immediately before the holder's death is generally included in the deceased person's income.

Deemed Receipt on Deregistration

Deregistration occurs when a RRIF no longer meets the requirements to remain registered under the applicable tax rules.

When a RRIF is deregistered, the taxpayer may be deemed to have received an amount equal to the fair market value of the plan immediately before deregistration.

This amount is reported in Box 20 of the T4RIF slip and is generally reported on Line 11500 or Line 13000, depending on the nature of the amount and the applicable reporting rules.

Other Income or Deductions

Amounts reported in Box 22 of the T4RIF slip may relate to the acquisition or disposition of property within the RRIF after the death of the annuitant.

If the amount in Box 22 is positive, it is generally reported on Line 13000 of the Income Tax and Benefit Return.

If the amount is shown in brackets, it represents a negative amount and may be deductible on Line 23200, subject to the applicable tax rules.

Transfer of a RRIF After Marriage or Common-Law Relationship Breakdown

Certain RRIF amounts may be transferred to another RRSP or RRIF following the breakdown of a marriage or common-law partnership.

The transfer must generally be made under a qualifying:

• Decree or order of a court or competent tribunal;
• Judgment of a competent tribunal; or
• Written separation agreement between the taxpayer and their current or former spouse or common-law partner.

The transfer must relate to the settlement of rights arising from the breakdown of the marriage or common-law partnership.

Form T2220 – Transfer from an RRSP or a RRIF to Another RRSP or RRIF on Marriage Breakdown is used to document the details of an eligible transfer.

Example

John receives a minimum RRIF payment of $10,000 during the year. He decides to withdraw an additional $5,000 to cover his living expenses.

His total RRIF withdrawal is $15,000. The $5,000 above the minimum is considered an excess amount. The total taxable RRIF income is generally reported in Box 16 of his T4RIF slip and included on Line 11500 of his tax return.

Key Takeaways

RRIFs are an important source of retirement income, but withdrawals are subject to specific tax and reporting rules. Taxpayers should remember that:

• RRIF withdrawals are generally taxable.
• A minimum amount must be withdrawn each year once the minimum withdrawal rules apply.
• Withdrawals above the minimum are considered excess amounts.
• RRIF income is generally reported using information from the T4RIF slip.
• Special tax rules apply when a RRIF holder dies.
• A decrease in the value of a RRIF after death may qualify for a deduction in certain circumstances.
• Certain RRIF transfers following a marriage or common-law relationship breakdown may receive special tax treatment.

Final Thoughts

Understanding how RRIF withdrawals, minimum amounts, excess payments, death benefits, and transfers are taxed can help retirees manage their retirement income more effectively. Keeping the T4RIF slip and other supporting documents is important for accurate tax reporting and for determining whether special tax rules apply.