RRSP maturity options
You must have decided on your maturity option and collapsed your RRSP by December 31st of the year in which you turn 71, at the latest. You can select any or a combination of the following options:
- Take your RRSP funds in a cash payment and pay tax on the full amount.
- Transfer into a Registered Retirement Income Fund (RRIF).
- Purchase an annuity.
What is a RRIF?
The minimum amounts are calculated as a percentage of the value of your RRIF at the beginning of each year.
The only year in which you are not required to take a minimum payment is the year in which you open the RRIF.
There is no maximum amount you can withdraw.
All amounts withdrawn are taxed as income.
Can I still make contributions to my RRIF?
You cannot make contributions to a RRIF. The only new funds that may come into your RRIF are transfers from other RRSPs or RRIFs. If you are under age 71 and have a RRIF, you can continue to hold an RRSP and make contributions. Or, if you are over age 71 but your spouse is younger, you can continue to make spousal contributions to their RRSP.
What investments can be held in a RRIF?
You can hold the same qualified investments in your RRIF as in your RRSP. If you have a self-directed RRSP, you can transfer the assets intact into a self-directed RRIF. However, some changes to the portfolio may be necessary to provide the income needed for your income payments.
Can you hold foreign content in a RRIF?
30% foreign content limit in RRSPs and registered pension plans is now a thing of the past.
Canadian investors now have the option to invest up to 100% of their retirement plans into foreign securities, without penalty.
Opportunities for money managers to seek out the best investment opportunities wherever they exist is wonderful news for Canadians - provides the opportunity for greater diversity and more attractive risk-adjusted returns.
The biggest advantage of holding a RRIF is that it allows you to continue with the investment program that you have established and therefore provides the most flexibility of all your retirement income options.
You can elect to take payments beyond the required minimum, and you have the ability to change your investments should your circumstances, or the markets, change.
A RRIF offers protection from inflation by allowing you to increase the amounts of your payments over the years to keep pace with your higher living costs.
This publication has been prepared by Scotia Capital Inc. (“Scotia iTRADE”) and is intended as a general source of information and for educational purposes only and should not be considered as personal and/or specific financial, tax, pension, legal or investment advice. This publication does not take into account the specific personal, financial, legal or tax situation or particular needs of any specific person. No information contained in this publication constitutes a recommendation by Scotia iTRADE to buy, hold or sell any security, financial product or instrument discussed therein. The information contained in this publication neither is nor should be construed as an offer or a solicitation of an offer by Scotia iTRADE to buy or sell securities or to follow any particular investment strategy. Scotia iTRADE does not make any determination of your general investment needs and objectives, or provide advice or recommendations regarding the purchase or sale of any security, financial, legal, tax or accounting advice, or advice regarding the suitability or profitability of any particular investment or investment strategy. You will not solicit any such advice from Scotia iTRADE and in making investment decisions you will consult with and rely upon your own advisors regarding the appropriateness of implementing strategies before taking any action based upon the information contained in this publication. Opinions and projections contained in this publication are our own as of the date hereof and are subject to change without notice. While care and attention has been taken to ensure the accuracy and reliability of the material in this publication, neither Scotia iTRADE nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of such material and disclaim any liability resulting from any direct or consequential loss arising from any use of this publication or the information contained herein. This publication and all the information, opinions and conclusions contained herein are protected by copyright. This publication may not be reproduced in whole or in part without the prior express consent of Scotia iTRADE.