A registered retirement income fund (RRIF) is an investment vehicle registered with the government of Canada. You transfer your registered retirement savings plan (RRSP) investments into a RRIF when you are ready to retire and start making withdrawals. Under Canadian tax law as of July 2010, any RRSP investment must be transferred to a RRIF no later than December 31 of the year in which the RRSP owner reaches the age of 71.
Withholding Tax on Minimum Withdrawal
Under Canadian tax law current as of July 2010, withholding tax is not required on minimum withdrawals from a RRIF.
There is no minimum withdrawal requirement in the year the RRIF is issued. Starting with the next calendar year, the minimum withdrawal amount is equal to the value of the RRIF at the start of the year multiplied by the prescribed factor. The prescribed factor is based on the RRIF owner's age at the beginning of the year. If the age is less than 71, the prescribed factor is 1 divided by [90 minus the age]. Otherwise, the prescribed factor can be obtained in the Canada Revenue Agency (CRA) T4RIF guide chart.
Excess Amounts, Except Quebec
Total withdrawals from your RRIF in a calendar year in excess of the minimum are called "excess amounts." Withholding taxes will apply on excess amounts withdrawn from a RRIF. The withholding tax rate depends on the amount of the withdrawal. For withdrawals of £3,250 or less, the withholding tax rate is 10 per cent. For withdrawals of £3,250 to £9,750, the withholding tax rate is 20 per cent. For withdrawals of £9,750 or more, the withholding tax rate is 30 per cent.
Excess Amounts, Quebec Only
For Quebec residents, withdrawals of £3,250 or less are subject to a withholding tax rate of 21 per cent. For withdrawals of £3,250 to £9,750, the withholding tax rate is 26 per cent. For withdrawals of £9,750 or more, the withholding tax rate is 31 per cent.
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