FI Financial

Group of Companies

RRSP and RRIF General Rules

  1. Segregated Funds
  2. Tax Sheltering
  3. Health and Dental Plans Purchased Online
  4. Critical Illness Coverage
  5. Pension Plans & I.P.P.'s
  6. Annual RRSP and IPP maximums
  7. RRSP RRiF General Rules
  8. What types of incomes Qualify For An RRSP?
  9. A Option to Provincial Medicare
  10. Types of Funds
  11. Tax Deferral and Investment Diversification
  12. Tax-Free Savings Account (TFSA)

 

RRSPs

  • Earnings are tax sheltered until they are withdrawn
  • RRSP receipts are issued for all contributions made throughout the year
  • RRSP Maximums
RRIF Minimum Income Rules
>>Learn more

Registered Income Options


RRSP plans must mature by no later than the end of the year in which the annuitant reaches age 69. At that time, four options are available: Cash Withdrawal, Life Annuity, Term Certain Annuity to age 90, or Registered Retirement Income Fund (RRIF).

  1. Cash Withdrawal – The entire amount is taxable in the year it is withdrawn. Depending on the tax bracket of the annuitant, more than half of the RRSP’s assets may be lost to taxation.
  2. Life Annuity – This option is suited to individuals who want a predefined guaranteed income and do not want to manage their investments. If provide guaranteed income for the life of the annuitant and the life of the annuitant’s spouse under a joint life annuity. On the death of the last annuitant, the estate value is equal to the value of the remaining guaranteed payments.
  3. Term Certain Annuity – This option provides a guaranteed income to age 90 for the annuitant or annuitant’s spouse, if younger. Because the payments are guaranteed, the estate value on the death of the annuitant is equal to the value of the remaining guaranteed payments.
  4. Term Certain Annuity – This option provides a guaranteed income to age 90 for the annuitant or annuitant’s spouse, if  younger. Because the payments are guaranteed, the estate value on the death of the annuitant is equal to the value of the remaining guaranteed payments.
  5. Registered Retirement Income Fund (RRIF) – This option has many attractive features not offered by other RRSP maturity options:

 

    • Control Over Investments – RRIFs provide the opportunity to manage and control retirement funds by offering a wide range of investment alternatives.
    •  Income Flexibility – The ability to vary income to meet changing needs with one restriction – a minimum amount must be received each year.
    • Continuing Tax Deferral – By supplementing RRIF minimum income with income from non-registered investments, your client can maximize the tax deferral on RRIF assets and build a higher estate value at the same time.

 

Other Legislative Requirements

  • Income Commencement:

    Payments out of a RRIF must commence no later than December 31st of the year following the year of issue of the RRIF.
  • Election of Spouse’s Age:

    the client can elect to use his/her spouse’s age in determining the minimum payment calculation. This election must be made prior to income commencement and cannot be reversed.
  • Transfer of Funds to an RRIF:

    The client can establish an RRIF by having property directly transferred from:
    • his/her own RRSP (form T2033)
    • another RRIF under which they are the annuitant (form T2033)
    • a RRSP or RRIF under which his/her spouse or former spouse is the annuitant, pursuant to a marriage breakdown (form T2220)
    • a RRSP annuity commutation payment (form T2030)
    • a RRSP Refund of Premiums (form T2019; the surviving spouse must apply for this in writing)
    • an excess amount paid out of an RRIF (form T2030) (See below)
    • The client can also transfer the amounts described above to an existing RRIF.
  • Direct Transfer of an Excess Amount from a RRIF:

    If the client receives more than the minimum amount in a year from a RRIF, he/she can directly transfer the excess amount (subject to applicable Deferred Sales Charges) to another RRIF under which they are the annuitant, to a RRSP under which they are the annuitant or to an eligible annuity under which they receive the annuity payment.
  • A client can only transfer RRIF property to a RRSP under which they are the annuitant until the end of the year in which they reach 69 years of age.
  • Death of the Annuitant:

    The net value of the RRIF property at the time of the annuitant’s death has to be included as income on the deceased annuitant’s final tax return filed for the year of death. However, the spouse can be named as beneficiary under the contract and the legal representative of the deceased annuitant’s estate approves it.
  •  There are two other options:

    •  
      • Naming a successor annuitant – the spouse becomes the new annuitant of the RRIF after the annuitant’s death and receives payments from the RRIF as successor annuitant. T4RIF slips reporting these payments will be issued in the spouse’s name.
      •  Naming the spouse as the beneficiary – the surviving spouse receives the balance of the RRIF funds. The portion of this amount that exceeds the minimum amount qualifies as an excess amount and can be transferred directly (subject to applicable Deferred Sales Charges) to a permitted investment (See "Direct Transfer of an Excess Amount from an RRIF" above). However, as indicated above, the deceased’s legal representative can name the spouse.

With Holding Taxes

Revenue Canada requires Maritime Life to withhold taxes on any amounts paid in excess of the minimum payment. As an option, the annuitant may request to have taxes withheld on all payments, not just payments in excess of the minimum.

Amount of Income Above Minimum  All Other Provinces  Quebec
  $0 - $5,000  10%  25%
$5,001 - $15,000  20%  33%
  $15,001 and up  30%  38%