Registered Retirement Income Options
Most Canadians will retire with more options and sources of income than they have ever had before:
- Employment pensions
- Canada Pension Plan
- Old Age Security
- personal savings, and of course
- income from RRSP savings.
Having all RRSP investments consolidated in a single RRSP simplifies retirement income planning and conversion from saving to income, without having to make changes to a well planned investment portfolio.
The most frequent choice for traditional RRSP savings is conversion into a Registered Retirement Income Fund (RRIF). A RRIF with B2B Bank Dealer Services provides the same investment options, reporting and online access as the corresponding RRSP, with the added feature that it is designed to distribute weekly, monthly, quarterly or annual income payments.
Regular RRIF payments can be easily structured using systematic withdrawals from a portfolio of mutual funds; or by actively managing maturities and asset sales and drawing at least the annual the minimum required withdrawal from a cash balance.
What are the options for locked-in funds?
Since most pension plan benefits must be locked-in prior to retirement, there are similar locked-in retirement income options. B2B Bank Dealer Services offers a suite of locked-in retirement options that meet the federal or provincial pension legislation governing the plans, and provide all of the investment choice and flexibility of a locked-in savings account.
- Life Income Funds (LIFs),
- Locked-in Retirement Income Funds (LRIFs),
- Prescribed Registered Retirement Income Funds (PRRIFs), and
- Restricted Locked-in Income Funds (RLIFs).
Locked-in accounts are subject to both minimum and maximum withdrawals, and all amounts are included in the annuitant's taxable income for the year.
The total value of any withdrawal from a RRIF is taxable in the year it is received. The minimum annual withdrawal is calculated at the beginning of the year based on year-end closing balance and the age of the annuitant, or the age of the younger spouse if applicable. No tax is withheld on the minimum amount; however withdrawals in excess of the minimum are subject to withholding taxes.