Dealing with your RRSP at Age 71

April 2022

You turn 71 this year and saved money in your Registered Retirement Savings Plan (RRSP).  The law requires that you begin winding down your RRSP before the end of the year in which you turn 71.  You have two options.

Cash Out

Close down your RRSP.  This amount gets added to your income for the year and you pay taxes based on your marginal tax rate.

Establish a Registered Retirement Income Fund

A RRIF functions similar to your RRSP except that no further contributions are allowed and a minimum amount must be withdrawn each year.  The RRIF withdrawal rate is 5.28 percent at age 71 and increases each year.  This allows you to keep your money in a tax-free account and withdraw it over time or in a year where your marginal tax rate is lower.  Withdrawn funds can be added to a TFSA if you have contribution room or to any non-registered investment account.