What Happens to Your RRSP When You Turn 71?

Discover the essential steps for your RRSP at age 71, including conversion options and tax implications.

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At age 71, your RRSP must be converted into a RRIF (Registered Retirement Income Fund) or an annuity for you to start receiving payments. Converting to a RRIF allows you to draw an income while continuing to grow the investment, subject to a minimum annual withdrawal amount. Failure to convert by December 31 of the year you turn 71 will result in your RRSP being fully taxed as income.

FAQs & Answers

  1. What is the difference between a RRIF and an annuity? A RRIF allows for flexible withdrawals while keeping your investment growing, whereas an annuity provides fixed payments for a specified period or for life.
  2. What happens if I don’t convert my RRSP by age 71? Failure to convert your RRSP by December 31 of the year you turn 71 results in the entire amount being taxed as income.
  3. Can I still contribute to my RRSP after age 71? No, you cannot contribute to your RRSP after age 71, but you can withdraw funds from your RRIF.
  4. How do I determine my minimum annual withdrawal from a RRIF? Your minimum annual withdrawal from a RRIF is based on your age and the value of the RRIF at the beginning of the year, calculated according to the Canada Revenue Agency’s prescribed factors.

Watch More

For more insights on retirement finances, check out our videos on RRIF management and the impact of taxes on your retirement savings.

  1. Should You Withdraw Money from Your RRSP Before Turning 71? Key Considerations Explore the benefits and considerations of withdrawing from your RRSP before age 71 to optimize your financial strategy.
  2. Understanding the 5-Year Rule for Retirement Accounts Learn about the 5-year rule for Roth IRAs and how it impacts your tax-free withdrawals in retirement.
  3. Understanding the 4% Retirement Rule: Your Guide to Sustainable Withdrawals Learn how the 4% retirement rule helps you withdraw funds wisely from savings for a secure retirement.