What's the difference between an RSP and a RIF?
The major difference between the two savings products is that you cannot contribute to a RIF as you did into your RSP. Instead, the money you've been contributing into your RSP is transferred to a RIF to be used as income in the year you turn 71. The year after you turn 71, you will begin to receive RIF Payment Amounts, which will be taxed by the government as income. You can withdraw as much or as little as you'd like on top of the annual minimum required by the Canada Revenue Agency (CRA), yet, these amount are subject to withholding taxes. However, you'll have the flexibility of accessing your retirement funds when you need a little extra every now and then.
When do I need to open a RIF?
The Income Tax Act requires that any funds in an RSP must be moved into a RIF by the end of the year that you turn 71. Since there's no requirement to receive a RIF Payment Amount during the year that you set up a RIF Plan, you'll begin receiving RIF Payments Amounts during the following year. You can also open a RIF Plan before the age of 71.
What is a RIF Payment Amount?
RIF Payment Amounts are designed to provide you with a regular stream of retirement income. The Income Tax Act defines the minimum RIF Payment Amount as the amount that must be withdrawn each year after the year the RIF Plan holder turns 71. The RIF holder may withdraw an amount greater than the minimum RIF Payment amount if they wish, but cannot withdraw less. Here are some more details:
- The calculations for the minimum RIF Payment Amount are based on either the date of birth of the RIF Plan holder or the Plan holder's spouse, as applicable.
- If the RIF Plan holder wishes to use their spouse's age to calculate the minimum annual RIF Payment Amount, this must be communicated to Tangerine before the first withdrawal is made from the RIF. As per government regulations, once the first RIF Payment Amount is made, the option to use a spouse's age for calculations will no longer be available.
- If the RIF Plan holder uses their spouse of a younger age to calculate the RIF Payment Amount, the minimum RIF Payment Amount will be lower, meaning that the RIF's funds can grow on a tax-sheltered basis for a longer period of time.
- Although a RIF Payment Amount must be received at least once a year, you can specify the frequency of receiving your RIF Payment Amounts: weekly, bi-weekly, monthly, quarterly and annually.
- If no RIF Payment Amount is made during the course of the year, or if a partial amount is to be withdrawn to satisfy the minimum RIF Payment Amount, Tangerine will make the withdrawal transaction on behalf of the RIF Plan holder on December 15th of that year.
- The RIF Payment Amount required for withdrawal will be transferred to a non-registered Account held by the RIF Plan holder.
- You'll receive T4RIF tax receipts (a RL2 for Quebec residents) stating the amount of funds taken out of your RIF Plan annually, including both RIF Payment Amounts and additional withdrawals.
How is the minimum RIF Payment Amount calculated?
The minimum RIF Payment Amount is calculated based on your age (or your spouse's age, as applicable) and the balance in your RIF Plan at the beginning of each year. Simply multiply the appropriate factor mentioned in the table below by your RIF Plan balance (or fair market value) on January 1st of the year that the minimum RIF Payment Amount is calculated for. Please note that the table below is provided for information purposes only. This information is also available on the CRA website. Please visit the CRA website at cra.gc.ca for the latest information on RSPs and RIFs.
|Age on Jan. 1st||Factor (Post 1992)|
|Under 71||1/(90 - Y)
Y = Current Age
|95 or older||0.2000|
How do I change my RIF so that my RIF Payment Amounts are calculated based on my spouse's age?
When your RIF Plan is created with Tangerine, the default calculation of the minimum RIF Payment Amount is based on your date of birth. This option can be changed online by logging in to your RIF Plan and visiting the "Change RIF Payment Details" page, which can be found on the left navigation menu. If you want to make this change, it must be requested before the first RIF Payment Amount is made from the RIF. Once the first RIF Payment Amount is made, the option to use your spouse's age for calculations will no longer be available.
How are withdrawals from a RIF taxed?
Withdrawals from a RIF Plan (including the minimum RIF Payment Amount) are considered taxable income in the year that the funds are withdrawn. The taxation rate will vary based on your total income and where you live.
Also, as per federal and provincial regulations, the following withholding taxes will be applied to any additional withdrawal(s) that are in excess of your minimum RIF Payment Amount:
|Amount withdrawn above the minimum RIF Payment Amount||Withholding tax in all provinces, except Québec||Withholding tax in Quebec|
|Up to $5,000||10%||21%|
|$5,001 to $15,000||20%||26%|
|More than $15,000||30%||31%|
What receipts are issued for withdrawals from a RIF Plan?
If withdrawals are made from your RIF Plan during the year, a T4RIF (or a RL2 for Quebec residents) will be issued. It will show the amount withdrawn from your RIF Plan as well as the amount of withholding taxes applied (if any) on additional withdrawals beyond the minimum RIF Payment Amount.
Are there any penalties for redeeming the minimum RIF Payment Amount?
No, since you are required to withdraw a minimum payout each year.
How can I make contributions to a RIF?
You can only transfer funds into a RIF Plan from an RSP or another RIF. You can not contribute non-registered funds to a RIF.
To transfer funds from an RSP or RIF held by another Financial Institution, please complete the RIF Direct Transfer on our website. Once completed, sign and return the printable form, and we'll handle the rest of the transfer for you (meaning that you won't need to contact your other bank). As an additional incentive for transferring, once Tangerine receives the RSP/RIF funds from your other Bank, we'll pay you interest from the day that you requested the Direct Transfer with us.
How do I change the RIF Payment Amount details for my RIF?
Once logged in, you can manage your RIF online by logging in to your Account and selecting "Change RIF Payment Details" from the left navigation menu. You can also make changes to your RIF by calling us at 1 888-464-3232. We'll be happy to help you withdraw funds or make changes to the options on your RIF Plan.
You can modify your RIF Payment Amount frequency, start date, transfer-to account, as well as the date of birth used for RIF Payment Amount calculations (if applicable). You can also request withdrawals in excess of the minimum annual RIF Payment Amount , however please remember that applicable government withholding taxes will apply to the additional withdrawal amount.
How do I designate beneficiaries on my RIF?
When you get the chance, please print and complete the RIF Beneficiary Designation form, and return it to us. Unfortunately, the beneficiary (or beneficiaries) that you designated on your RSP will not migrate to your RIF Plan.
How do I withdraw additional RIF Payment Amounts from my RIF Plan?
If you wish to withdraw funds from your RIF in excess of the minimum RIF Payment Amount, you can do so online by logging in and clicking on the "Move my Money" tab. From this page, please click on the "Withdraw from my RSP or RIF" link, and select the amount and Accounts that you wish to transfer funds from/to. If you still have a remaining minimum RIF Payment Amount for the year, these funds will be included in your withdrawal first. The amount requested in excess of your minimum RIF Payment Amount will be subject to withholding taxes.
What RIF investment options does Tangerine offer?
Tangerine has offered RIF Investment Funds through its investment fund subsidiaries for a while, but we now also offer our Clients the ability to save during retirement in RIF Savings Accounts and RIF Guaranteed Investments (RIF GICs). As always, these products offer competitive interest rates with no fees or service charges. If you're looking to keep your retirement savings in a low risk, high return investment, our RIF Savings Accounts and GICs offer excellent value. For more information about RIFs, please visit the CRA website at cra.gc.ca.