While RRSP season may be over, if you have yet to reach retirement, consider the value in thinking ahead to the time when you will eventually access these funds. Here are four things you may not know about the Registered Retirement Income Fund (RRIF).

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1. You can convert the RRSP to the RRIF earlier than age 71. The RRSP matures by the end of the calendar year in which the holder turns age 71 and is often converted to a RRIF at that time. However, you are able to open a RRIF earlier than this age. Minimum withdrawal payments will still be required, but not until the calendar year following the year that the RRIF account is opened.

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2. You can hold a RRSP and RRIF at the same time. While the RRIF is usually used by an investor to transfer funds once the RRSP matures, there may be instances in which you may want both. If you need to generate pension income to take advantage of the federal pension income tax credit, you could consider opening a small RRIF at the age of 65. At the same time, you can still continue operating your RRSP to capture the ongoing tax deductions from your contributions. Consider also that you can notionally split up to 50 percent of your eligible pension income (which includes RRIF income from age 65) with a spouse (or common-law partner).

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3. You are able to convert a RRIF back to a RRSP. If you’ve converted funds to the RRIF earlier than age 71 and realize that it’s no longer to your benefit, you are able to convert it back. You may decide to do an early conversion if you retire early, take a sabbatical or have an extended leave from work, since the loss of income means you may be in a lower tax bracket or you may need funds. However, if you return to work, it may be beneficial to resume the RRSP.

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4. You can base RRIF withdrawals on a spouse’s age. If you have a younger spouse, it may be useful to use their age to result in a lower minimum withdrawal rate for your RRIF. Be aware that this must be done when first setting up the RRIF and before you have received any payments, so plan ahead.

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This article was originally published in the Spring 2022 newsletter, "Challenging the Trend." Click here to view.