Registered Retirement Income Funds (RRIFs) and Life Income Funds (LIFs) are two of Canadians’ main options for generating retirement income from their registered savings. While RRIFs and LIFs share some similarities, there are important differences regarding the rules for withdrawing money from these plans.
Our guide will explain everything you need to know about RRIF and LIF withdrawal rates, rules for married couples, tax implications, strategies, and more. With thousands of Canadians converting their RRSPs into RRIFs or LIFs each year, it’s critical to understand how these retirement income vehicles work.
What Are RRIFs and How Do They Work?
A Registered Retirement Income Fund (RRIF) allows you to convert your RRSP savings into retirement income. Unlike an RRSP, where you make contributions annually, with an RRIF, you instead make regular withdrawals to supplement your retirement cash flow.
RRIFs have minimum annual withdrawal amounts you must take based on your age. However, there are no restrictions on maximum withdrawals. You can withdraw as much as you want each year, making RRIFs a flexible source of retirement funds.
The main benefits of using a RRIF include:
- Tax-deferred growth on investments held within the RRIF.
- Ability to consolidate multiple RRSPs into a single RRIF.
- Creditor protection on RRIF assets.
- Provides steady taxable income through required minimum withdrawals.
What Are the RRIF Minimum Withdrawal Percentages?
RRIFs require that you withdraw at least a minimum percentage of the plan value each year. The minimum withdrawal percentage factors in your age (or your spouse’s age) and the value of your RRIF holdings at the start of the year.
Here are the full RRIF minimum withdrawal percentages by age:
| Age | Minimum Withdrawal % |
| 55 | 2.86% |
| 56 | 2.94% |
| 57 | 3.03% |
| 58 | 3.13% |
| 59 | 3.23% |
| 60 | 3.33% |
| 61 | 3.45% |
| 62 | 3.57% |
| 63 | 3.70% |
| 64 | 3.85% |
| 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+ | 20.00% |
As you can see, the older you are, the higher the minimum percentage you must withdraw each year. Note that in the first year you open a RRIF there is no minimum withdrawal required.
The minimum RRIF withdrawal amounts are calculated each year based on your age and the prior year-end fund value. Your financial institution can provide you with the exact minimum you’ll need to withdraw.
What Are LIFs and How Are They Different From RRIFs?
While an RRIF can hold regular RRSP funds, a Life Income Fund (LIF) is specifically designed for locked-in pension money. Locked-in funds originate from a workplace pension plan and have stricter withdrawal rules.
The main differences between RRIFs and LIFs are:
- LIFs have maximum annual withdrawal limits in addition to minimums. RRIFs have no restriction on maximum withdrawals.
- LIF maximums vary by province, whereas RRIF rules are federally regulated.
- LIFs are for locked-in pension funds only. RRIFs can hold regular RRSP funds.
The maximums are designed to prevent pension funds from being depleted too quickly. LIFs strike a balance between generating retirement income and ensuring the funds last your lifetime.
What Are the LIF Maximum Withdrawal Percentage Rates?
Below are the LIF maximum withdrawal percentages currently in effect across Canada:
British Columbia, Alberta, Saskatchewan, Ontario, New Brunswick, Newfoundland
| Age | Max Withdrawal % |
| 55 | 6.51% |
| 56 | 6.57% |
| 57 | 6.63% |
| 58 | 6.70% |
| 59 | 6.77% |
| 60 | 6.85% |
| 61 | 6.94% |
| 62 | 7.04% |
| 63 | 7.14% |
| 64 | 7.26% |
| 65 | 7.38% |
| 66 | 7.52% |
| 67 | 7.67% |
| 68 | 7.83% |
| 69 | 8.02% |
| 70 | 8.22% |
| 71 | 8.45% |
| 72 | 8.71% |
| 73 | 9.00% |
| 74 | 9.34% |
| 75 | 9.71% |
| 76 | 10.15% |
| 77 | 10.66% |
| 78 | 11.25% |
| 79 | 11.96% |
| 80 | 12.82% |
| 81 | 13.87% |
| 82 | 15.19% |
| 83 | 16.90% |
| 84 | 19.19% |
| 85 | 22.40% |
| 86 | 27.23% |
| 87 | 35.29% |
| 88 | 51.46% |
| 89+ | 100.00% |
Manitoba, Quebec, Nova Scotia
| Age | Max Withdrawal % |
| 55 | 6.40% |
| 56 | 6.50% |
| 57 | 6.60% |
| 58 | 6.70% |
| 59 | 6.80% |
| 60 | 6.90% |
| 61 | 7.00% |
| 62 | 7.10% |
| 63 | 7.20% |
| 64 | 7.30% |
| 65 | 7.40% |
| 66 | 7.50% |
| 67 | 7.60% |
| 68 | 7.70% |
| 69 | 7.80% |
| 70 | 7.90% |
| 71 | 8.10% |
| 72 | 8.30% |
| 73 | 8.50% |
| 74 | 8.80% |
| 75 | 9.10% |
| 76 | 9.40% |
| 77 | 9.80% |
| 78 | 10.30% |
| 79 | 10.80% |
| 80 | 11.50% |
| 81 | 12.10% |
| 82 | 12.90% |
| 83 | 13.80% |
| 84 | 14.80% |
| 85 | 16.00% |
| 86 | 17.30% |
| 87 | 18.90% |
| 88+ | 20.00% |
Federal, Yukon, Northwest Territories, Nunavut
| Age | Max Withdrawal % |
| 55 | 5.16% |
| 56 | 5.22% |
| 57 | 5.27% |
| 58 | 5.34% |
| 59 | 5.41% |
| 60 | 5.48% |
| 61 | 5.56% |
| 62 | 5.65% |
| 63 | 5.75% |
| 64 | 5.86% |
| 65 | 5.98% |
| 66 | 6.11% |
| 67 | 6.25% |
| 68 | 6.41% |
| 69 | 6.60% |
| 70 | 6.80% |
| 71 | 7.03% |
| 72 | 7.29% |
| 73 | 7.59% |
| 74 | 7.93% |
| 75 | 8.33% |
| 76 | 8.79% |
| 77 | 9.32% |
| 78 | 9.94% |
| 79 | 10.68% |
| 80 | 11.57% |
| 81 | 12.65% |
| 82 | 14.01% |
| 83 | 15.75% |
| 84 | 18.09% |
| 85 | 21.36% |
| 86 | 26.26% |
| 87 | 34.45% |
| 88 | 50.83% |
| 89+ | 100.00% |
How Do the RRIF and LIF Withdrawal Rates Compare?
When you compare the minimum RRIF withdrawal rates to the maximum LIF rates, some key differences emerge:
- The LIF maximums are significantly lower than RRIF minimums starting around age 71. This prevents pension funds from being depleted too quickly.
- RRIF minimums scale up more aggressively at advanced ages than LIF maximums. With no withdrawal limit, RRIFs provide greater income flexibility.
- Provincial LIF rules can differ, leading to variations in maximum rates across the country. RRIF rules are consistent federally.
- RRIFs have no restriction on the upper withdrawal limit. LIFs strictly cap the annual maximum amounts.
So in summary, LIFs take a more conservative approach by capping withdrawals, while RRIFs offer wider flexibility on income levels, albeit with required annual minimums.
What Are the RRIF Withdrawal Rules for Married Couples?
RRIF withdrawal rules are slightly different when a married couple owns the plan.
For spousal or common-law partner RRIFs, the minimum withdrawal can be based on the age of the annuitant’s younger spouse. This allows the withdrawals to be calculated using a lower minimum percentage, reducing the taxable income that must be taken each year.
Pension income can also be split between spouses to take advantage of preferential tax brackets. Up to 50% of eligible pension income can be allocated from one partner’s tax return to the other’s, minimizing overall taxes owed.
RRIF withdrawals are considered eligible pension income and qualify for pension splitting when the receiving spouse or common-law partner is 65 or older.
What Tax Considerations Apply to RRIF and LIF Withdrawals?
Any funds withdrawn from an RRIF or LIF are considered fully taxable income for that year. Here are some key tax considerations:
- Required minimum RRIF withdrawals are taxable income but have no withholding tax deducted. You must account for these amounts when estimating your income taxes owed.
- LIF withdrawals are also added to your taxable income without withholding tax on the minimum amounts.
- Extra RRIF/LIF withdrawals beyond the minimums are subject to withholding tax at graduated rates based on the excess amount:
Up to $5,000 Withdrawn: 10% withholding tax (5% in Quebec)
$5,001 to $15,000: 20% withholding tax (10% in Quebec)
Over $15,000: 30% withholding tax (15% in Quebec)
- Quebec residents pay an additional provincial withholding tax on top of the federal tax.
- Withdrawals made to a spouse or common-law partner can qualify for pension income splitting, allowing you to allocate up to 50% of eligible pension income to lower their tax burden.
- At age 65, RRIF/LIF withdrawals also qualify for the non-refundable pension income tax credit.
What Happens to Your RRIF or LIF When You Pass Away?
If you have a surviving spouse or common-law partner, they can usually inherit the remaining RRIF/LIF funds without immediate tax consequences. The assets can remain sheltered in a tax-deferred registered plan until the second spouse’s death.
Other beneficiaries will receive the funds as a fully taxable lump-sum distribution. If the RRIF/LIF has a named beneficiary, the amount can bypass the estate and transfer directly on a tax-deferred basis.
Naming a beneficiary on your RRIF or LIF ensures the funds avoid probate taxes and settle directly per your wishes. Speak with a financial advisor about optimizing your beneficiary designations.
What Are Some Smart RRIF and LIF Withdrawal Strategies?
Here are some savvy RRIF and LIF withdrawal strategies to consider:
- Take in-kind withdrawals from a RRIF by transferring investments directly to a non-registered account. This avoids selling costs and creates a tax-deferred transfer.
- Only convert part of your RRSP to an RRIF to maintain income flexibility. You can stagger your conversions over time.
- Structure your withdrawal schedule to optimize cash flow. Many options, such as monthly, quarterly, or annual payments, are available. Coordinate timing with your overall income needs.
- For LIFs, take advantage of provinces allowing 50% unlocking if you have other sufficient retirement income. Access more funds if permitted.
- Review your investments held within a LIF/RRIF. Prioritize tax-efficient holdings like Canadian dividends and capital gains.
The Bottom Line
RRIFs and LIFs share similarities as registered retirement income sources. However, key differences in their withdrawal rules, rates, and flexibility make understanding how they work essential.
Follow the required RRIF minimums and maximum LIF rates applicable to your province and age group. Consider the tax implications of withdrawals and time them strategically. Seek advice from a financial planner on setting up and managing your RRIF or LIF.
In addition to RRIFs and LIFs, several other key registered accounts and pension sources make up your retirement income plan. Be sure to learn about these important options as well:
- Canada Pension Plan (CPP)
- Old Age Security (OAS)
- Non-registered investment accounts
- Tax-Free Savings Account (TFSA)
- Company pension plans
FAQs related to RRIF and LIF
What is the difference between a RRIF and a LIF?
A RRIF (Registered Retirement Income Fund) can hold regular RRSP funds, while a LIF (Life Income Fund) is designed specifically for locked-in pension assets. LIFs have stricter rules including maximum annual withdrawal limits. RRIFs have no restriction on maximum withdrawals.
How are RRIF and LIF withdrawal rates calculated?
RRIF withdrawal rates are based on a minimum percentage of assets tied to your age. LIF withdrawal rates have both a minimum and maximum percentage based on your age and province.
Are RRIF and LIF withdrawals taxable?
Yes, any withdrawals from a RRIF or LIF are considered fully taxable income. Only withdrawals above the minimums are subject to withholding tax.
What happens to your RRIF or LIF when you die?
If you have a surviving spouse they can usually inherit the funds tax-free. For other beneficiaries, the assets are paid out as a fully taxable lump sum.
Can you convert only part of your RRSP to a RRIF?
Yes, you can choose to convert just a portion of your RRSP to a RRIF to maintain income flexibility, while leaving the rest to convert later.
What are smart RRIF withdrawal strategies?
Taking in-kind withdrawals, customizing your payment schedule, basing minimums on a younger spouse's age, and staggering RRSP conversions are some savvy RRIF strategies.