RRIFs

The evolution of an RRSP

WHAT ARE THEY?
Once you've reached retirement, it's time to cash in on your savings work over the years, namely your RRSPs. While RRSPs offer a tax-deferred shelter while you are saving toward retirement, Registered Retirement Income Funds (RRIFs) are the tax-deferred shelter after you turn 69. They allow Canadians to be charged tax only when they withdraw money, while the rest remains sheltered.

THE LAW
Canada Revenue Agency requires that all RRSPs be either cashed out or rolled over into RRIFs by the time the investor reaches the age of 69. Cashing out an entire lump-sum amount triggers income tax for the investor however, which is why RRIFs are often a suitable option.

CONTINUED GROWTH WITH REQUIREMENTS
Your investment continues to earn interest in a RRIF; however, you can no longer make deposits. The government of Canada requires that a minimum amount be withdrawn from a RRIF each year; this amount is determined by the individual's age and amount that was in the fund on January 1 of each year. The money withdrawn from this fund is taxed as regular income for the investor. You can, however, withdraw more than that amount at any point.

INCORPORATE INTO YOUR FINANCIAL PLANS
Turning over your RRSPs into RRIFs is a valuable to tool to avoid paying tax on the entire investment all at once. Instead, reap the rewards of continued tax-deferral. Your Rice Financial advisor will help determine how to put this registered product to your best use.

Visit your Rice Financial advisor for more information on this and other investment and insurance opportunities.