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AAnnual Minimum Payment (AMP)
The federal government requires that holders of Retirement Income
Funds (RIFs) withdraw a minimum amount of retirement income from
their RIFs each year. The AMP is calculated as a percentage of the
plan balance at the beginning of the year based on the planholder's
year of birth. If the planholder has a spouse or common law
partner, that individual's year of birth can be used instead.
Annuitant
Owner or planholder of a Retirement Income Fund (RIF).
Annuity
An investment providing periodic payments for a specified term or
for life. An annuity can be purchased with registered or
non-registered funds.
Attribution Rule
Attribution rule applies if contributions to the Spousal RSP (prior
to converting to a RIF) were made in the year of withdrawal or in
the two previous years of withdrawal. The withdrawn amount in
excess of the Annual Minimum Payment (AMP) is attributed back to
the contributor.
BBeneficiary
The person named to receive all or part of the proceeds of a
Retirement Income Fund (RIF) in the event of the death of the
annuitant or planholder.
Blended Payment
A retirement payment consisting of both a portion of the annual
minimum and an amount in excess of the minimum.
CCanada Pension Plan (CPP)
The Canada Pension Plan is a "contributory" plan.
This means that all costs are covered by the finanical
contributions paid into the Plan by employees, their employers and
self-employed people, and from interest earned on the investment of
that money. The Canada Pension Plan is not funded through general
tax revenues.
The Canada Pension Plan pays a monthly retirement pension to
people who have worked and contributed to the CPP. The CPP also
acts as an insurance plan, providing disability and survivor
benefits for those who qualify. It provides a monthly income to you
and your dependent children if you become severely disabled during
your working years. It also provides a monthly income to your
surviving spouse or common-law partner and dependent children if
you die. A lump-sum death benefit is available to your estate when
you die. For more information visit www.hrdc.gc.ca.
FFederal Pension Tax Credit
The first $1,000 of pension income (including earnings from
retirement income plans) is eligible for a 16% federal tax credit
for annuitants aged 65 or older.
GGuaranteed Income Supplement (GIS)
The Guaranteed Income Supplement provides additional money, on top
of the Old Age Security pension, to low-income seniors living in
Canada. To be eligible for the GIS benefit, you must be receving
the Old Age Security pension and meet the income requirements set
by the government.
LLife Income Fund (LIF)
A retirement income fund that is established by the transfer of
locked-in funds from a Registered Pension Plan (RPP), Locked-in
Retirement Savings Plan (LRSP), Locked-in Retirement Account (LIRA)
and in some cases a Locked-in Retirement Income Fund (LRIF).
Locked-in RSP (LRSP)
A retirement savings plan that is established by the transfer of
locked-in funds from a Registered Pension Plan (RPP) or another
locked-in retirement savings/income plan such as a Locked-in
Retirement Savings Plan (LRSP), Locked-in Retirement Account
(LIRA), Life Income Fund (LIF) or Locked-in Retirement Income Fund
(LRIF).
Locked-in Retirement Account (LIRA)
A retirement savings plan that is established by the transfer of
locked-in funds from a Registered Pension Plan (RPP) or another
locked-in retirement savings/income plan such as a Locked-in
Retirement Savings Plan (LRSP), Locked-in Retirement Account
(LIRA), Life Income Fund (LIF) or Locked-in Retirement Income Fund
(LRIF).
Locked-in Retirement Income Fund (LRIF)
See definition for LIF.
OOld Age Security (OAS)
The Old Age Security pension is a monthly benefit available, if
applied for, to most Canadians 65 years of age or over. Old Age
Security residence requirements must also be met. An applicant's
employment history is not a factor in determining eligibility, nor
does the applicant need to be retired. Old Age Security pensioners
pay federal and provincial income tax. Higher income pensioners
also repay part or all of their benefits through the tax system.
PPayment Base Year
Legislation allows minimum payments to be based on the birth year
of the planholder or their spouse. This allows payments to be based
on a younger age, thereby reducing payment amounts and increasing
funds available for investment.
Pension Tax Credit
The first $1,000 of pension income qualifies for a federal tax
credit (Pension Income Credit) for all planholders provided they
are at least 65 years of age.
Prescribed Retirement Income Fund (PRIF)
PRIFs are identical to regular Retirement Income Funds (RIFs), with
the following exceptions: a PRIF is creditor-protected, meaning
creditors cannot access PRIF funds upon the customer's insolvency
or bankruptcy, and, like Locked-in Retirement Income Funds (LRIFs),
PRIF funds cannot be commingled with regular RIF funds or other
locked-in funds.
QQuebec Pension Plan (QPP)
The QPP is the Quebec equivalent of the Canada Pension Plan (CPP).
See Canada Pension Plan, above, for details.
RRetirement Income Options
Retirement Income Options are options into which your retirement
savings can convert. The options are a RIF, an annuity or cash.
Retirement Savings Plan (RSP)
A retirement savings plan (RSP) is an investment account designed
primarily for saving towards your retirement years. Your annual RSP
contribution can greatly reduce the amount of income tax you pay in
that year and the money you put away can have years of tax-deferred
growth potential. You pay tax only on the amounts you withdraw.
Retirement Income Fund (RIF)
A RIF is a natural continuation of an RSP, providing the same tax
deferral of principal and earnings, with one key difference. Unlike
an RSP which permits contributions, a RIF requires that a minimum
amount, based on age, be withdrawn each year.
SSpouse/Common-Law Partner
For the purpose of the Canada Pension Plan, a
"spouse" is a person of the opposite sex with whom
you are in a legal marriage. "Common-law partner"
is defined as two people, regardless of sex, who have been living
together in a conjugal relationship for a year or more.
Spousal Retirement Income Fund
A RIF registered in the name of the contributor's spouse.
Successor Annuitant
If a spouse is named as successor annuitant, the Retirement Income
Fund (RIF) registration changes to the surviving spouse's name
after the annuitant passes away, so that the RIF plan and payment
amounts may continue to the spouse uninterrupted. Only a spouse can
be named a successor annuitant.
TT4 RIF
A T4 RIF is a tax slip issued annually and reflecting all
Retirement Income Fund (RIF) income received in the previous
calendar year. This income should be included as taxable income on
the customer's tax return. The T4 RIF will also indicate any tax
that was withheld at source.
WWithholding Tax
Tax is automatically withheld on any amount withdrawn in excess of
the minimum at the applicable tax rates (corresponding to RSP
withholding tax rates). The current Canada Customs and Revenue
Agency (CCRA) withholding tax rates are applied to any amount
withdrawn from a Retirement Income Fund (RIF) that exceeds the
annual minimum payment.
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