RETIREMENT PLANS

Video: Taxes And Registered Savings Plans

REGISTERED RETIREMENT SAVING PLANS (RRSPs)

REGISTERED RETIREMENT INCOME FUNDS (RRIFs)

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At age 71, RRSPs must be converted into either a RRIF or an annuity (or withdrawn in full and taxed), as RRSPs cannot be held past December 31 of the year the holder turns 71. Once converted to a RRIF, there is no age limit for how long the RRIF can remain open.

Withdrawals from RRIFs are mandatory starting the year after the RRIF is established. A minimum amount must be withdrawn annually, but there is no maximum limit—you can withdraw more if desired.

All withdrawals are included in your taxable income for the year in which they are received.

The minimum withdrawal is calculated as a percentage of the RRIF value as of January 1 each year.

For example:

• Age 72: 5.28%
• Age 73: 5.40%
• Age 74: 5.53%
• By age 94: 20.00%

These percentages are set by the CRA and may change.

LOCKED-IN RETIREMENT ACCOUNT

Locked-In RRSPs (LIRAs) hold funds transferred from a Registered Pension Plan (RPP) when a member leaves a pension plan before retirement. These funds are vested and cannot be withdrawn like regular RRSPs due to pension legislation.

LIRA funds remain locked in and cannot be accessed until retirement age or under specific unlocking conditions. By age 71, a LIRA must be converted into a Life Income Fund (LIF) or an annuity (or transferred to a locked-in RRIF, depending on jurisdiction).

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LIRA UNLOCKING

Unlocking rules vary by province or jurisdiction. In many provinces, including Ontario, individuals may be eligible to unlock up to 50% of their LIRA once it is converted to a LIF—this is a one-time unlocking option.

You may also be able to unlock LIRA funds under specific hardship or shortened life expectancy conditions.

Ask us how we can assist you in unlocking your LIRA funds under the one-time 50% transfer option or other applicable provisions.