You've worked hard to reach this stage of your life, and now it's time to enjoy yourself - traveling, spending time with grandkids, or maybe getting involved in your community. Planning your retirement income is one of the keys to living the life you want in retirement. Whether your retirement is close at hand, or still several years away, the time to start planning is now. Combining your retirement savings with other sources of income that you may have can result in a predictable, tax-efficient income stream, allowing you to enjoy a comfortable retirement.
1. Retirement Income Options (RIOs) provide you with a retirement income stream using the money you saved during your working years. Many of these retirement income options offer tax-deferred growth, similar to your Retirement Savings Plan (RSP).
2. The most common type of RIO is a Retirement Income Fund (RIF)1. A RIF gives you the flexibility to determine the amount of income you withdraw each year from your retirement savings. The only requirement is that you receive a minimum annual amount, according to a predetermined schedule set by the federal government. You can increase, decrease or change your income stream any time you choose. You only pay tax on the money you withdraw from your plan each year.
A RIO is also available for your Locked-in RSP (LRSP) or Locked-in Retirement Account (LIRA) in the form of a Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF) or Prescribed Retirement Income Fund (PRIF), depending on the governing legislation of the original pension plan.
Your Retirement Savings Plan (RSP) can be converted to a form of retirement income at any time, but no later than the end of the calendar year in which you turn 71. At that time, you'll have three choices:
1. Convert your RSP to a Retirement Income Fund (RIF)
2. Convert your RSP to an annuity
3. Withdraw the entire amount of your RSP in one lump sum
We’ll help you create a written plan, so you'll always know where you're going and how you're going to get there. That leaves you free to focus on the things that matter most to you.
Together, we’ll help you calculate the total retirement income you can expect to receive and even consolidate your retirement savings from all sources into one comprehensive plan for easier management and recordkeeping.
We’re always here to answer your questions and help you make any adjustments to your plan.
Take a look at the TD Retirement Income Options available to you.
Retirement Income Options are investments that can help make your retirement income last:
There's comfort in knowing where you stand today and what you still need to save.Try the calculator
The most common Retirement Income Option is a Retirement Income Fund (RIF)1. A RIF gives you the flexibility to determine the amount of income you withdraw each year from your retirement savings. The only requirement is that you receive a minimum annual amount, according to a predetermined schedule set by the federal government. You only pay tax on the money you withdraw from your plan each year.
A TD Flexi-RIF lets you customize your plan to suit your needs. You can choose to have your required annual minimum payment (AMP) paid to you monthly, quarterly, semi-annually or annually, and funds are deposited directly into your TD Canada Trust savings or chequing account to ensure there are no delays in your payments. If you choose, you can make additional withdrawals from your Flexi-RIF at any time.The highlights:
Convert your Locked-in Retirement Account (LIRA), Locked-in RSP (LRSP) or Restricted Locked-in Savings Plan (RLSP) into a steady stream of retirement income
If you've been saving for retirement by contributing money to a LIRA or LRSP or hold a RLSP, you've probably discovered the impressive potential of tax-deferred investment growth. When you retire, you can continue to enjoy tax-deferred investment growth by converting your savings into a Retirement Income Option such as a Life Income Fund (LIF), a Locked-in Retirement Income Fund (LRIF), Restricted Life Income Fund (RLIF) or a Prescribed Retirement Income Fund (PRIF).
Life Income Funds (LIFs) Locked-in Retirement Income Funds (LRIFs) Restricted Life Income Fund (RLIFs) Prescribed Retirement Income Funds (PRIFs)
A LIF is a plan that allows you to maintain full control of your investment choices while allowing the flexibility of withdrawing funds, within prescribed limits, as you require.
Minimum and maximum withdrawal amounts apply to LIFs and in some provinces, they must be converted to a Life Annuity at certain age limits (see chart below).
|Province||Age at which you must convert to a Life Annuity|
|New Brunswick, Quebec, Nova Scotia, Manitoba, Alberta, Federal, British Columbia, Ontario||Not Applicable|
A LRIF is a plan governed by Manitoba or Newfoundland legislation that allows you to maintain full control over your investment choices throughout retirement. Minimum and maximum withdrawal limits apply and a LRIF may be held indefinitely.
RLIFs hold locked-in funds governed by the federal Pension Benefits Standards Act, 1985. Minimum and maximum limits apply. There is no requirement to convert an RLIF to a life annuity at age 80.
PRIFs are only available to investors who have pension funds governed by Saskatchewan or Manitoba legislation. There are minimum withdrawal limits but no maximum withdrawal limits. You are not required to purchase a Life Annuity, and your spouse is automatically named as your beneficiary. Spouses may sign a waiver allowing you to designate a different beneficiary.
When it comes time to convert your RSP into a Retirement Income Fund, make your retirement money work hard for you on a tax-deferred basis by investing it in a mutual fund.The highlights:
A RIF is designed to provide income using your RSP savings. Although you can convert your RSP savings to a RIF at any age, it must occur prior to the end of the year in which you turn 71.
With a TD Mutual Funds RIF, you'll enjoy control, flexibility and convenience:
As a registered account, your TD Mutual Funds RIF maintains the benefits of tax-deferral. Only the amount withdrawn from the account is subject to tax. Income tax will be deducted at source from any amount withdrawn over the annual minimum payment.
Although you may not contribute additional funds to your TD Mutual Funds RIF, you are free to reallocate your holdings between the family of TD Mutual Funds and TD Managed Assets Program Portfolios.
A TD Mutual Funds Retirement Income Fund can help you make the most of your assets when it's time to convert your RSP to retirement income.
When you open a TD Mutual Funds RIF account, you'll enjoy all of these advantages:
TD Mutual Funds Life Income Fund (LIF): Strengthen your portfolio with a mutual fund and get complete control over how you receive your retirement income. LIF is designed to provide income using your Locked-In RSP or pension savings. Although you can convert your locked-in savings to a LIF whenever it is allowed by the rules governing your plan (age 55 in most provinces), it must occur prior to the end of the year in which you turn 71.
For funds governed by the legislation of Newfoundland & Labrador, by the end of the year in which you reach the age of 80, you must use the remaining amount left in your LIF to purchase a life annuity. You may also convert it to a Locked-In Retirement Income Fund (LRIF).
TD Mutual Funds Locked-In Retirement Income Fund (LRIF): your retirement savings at a locked-in rate without having to convert it to a life annuity at age 80.
LRIFs, RLIFs and PRIFs are similar to LIFs with one notable exception: there is no requirement to convert your LRIF, RLIF or PRIF to a life annuity at age 80. You can maintain your LRIF, RLIF or PRIF indefinitely throughout your retirement years.
As registered accounts, the funds within TD Mutual Funds LIFs and LRIFs maintain the benefits of tax deferral. Only the amount withdrawn from the account is subject to tax. Income tax will be deducted at source for any amount withdrawn over the annual minimum payment.
In addition to the annual minimum amount you must withdraw, there is also an annual maximum you are able to withdraw. This maximum is designed to ensure you will have income until age 80.
It's important to note that the availability of LIFs, LRIFs, RLIFs and PRIFs varies across Canada.
Please be aware that LIFs are not available under the pension legislation of Saskatchewan, Yukon, Nunavut or Northwest Territories.
Additionally, please note that LRIFs are only available for locked-in plans governed by legislation of certain provinces. Currently, LRIFs are only available under the pension legislation of Newfoundland & Labrador. RLIFs are available for locked-in plans governed by the federal pension legislation. PRIFs are covered by Saskatchewan and Manitoba legislation. Please contact your local TD Canada Trust branch for more details.
A TD Waterhouse RIF gives you the freedom of a self-directed plan designed to meet your needs.The options:
If you were a member of a Registered Pension Plan (RPP), your employment has ended, and your plan was fully vested, the proceeds of that RPP would be considered 'locked-in'. These locked-in funds can only be transferred into certain locked-in plans.
A Life Income Fund (LIF) is a plan that allows you to maintain full control of your investment choices with flexibility.The highlights:
A Locked-in Retirement Income Fund (LRIF) is a plan governed by Manitoba or Newfoundland legislation.The highlights:
A Restricted Life Income Fund (RLIF) is a plan governed by federal legislation.The highlights:
A TD Prescribed Retirement Income Funds are only available to investors who have pension funds governed by Saskatchewan and Manitoba legislations.The highlights:
The federal government requires that holders of retirement income funds withdraw a minimum amount of retirement income from their RIFs each year. The calculation of your minimum annual RIF withdrawal is based on your age or your spouse's age (as of January 1st of the current calendar year) and the value of the RIF at the previous year's end. If your spouse is younger, consider using your spouse's age. This will result in a lower minimum withdrawal, allowing more of your capital to grow in a tax-deferred environment.
|Your age — or your spouse's
(the choice is yours)3
|Your age — or your spouse's
(the choice is yours)3
(value of RIF at
All RIF withdrawals are subject to income tax in the year that income is received. In the year the plan is opened, there is no prescribed minimum amount and the amount you withdraw is subject to withholding tax. Every year after that, you are only taxed at source on the amount that exceeds your prescribed minimum.
TD Canada Trust will send you a tax slip in time for tax season, reflecting all RIF income you received in the previous year, which should be included as taxable income with your tax return. The slip will also indicate any tax that was already deducted.
1. Take advantage of the federal age tax credit on your tax return. If you're 65 or older, you may be eligible for an additional age deduction, depending on your income.
2. Use the pension tax credit. The first $2,000 of eligible pension income is eligible for a 15%federal pension income tax credit, as well as a provincial tax credit that varies from province to province (some exceptions may apply).
3. Generate income from non-registered investments. It's generally better to draw income from non-registered investments before you use tax-deferred, registered assets.
4. Elect on your tax return to include all Canadian dividends received by the lower-income spouse as part of your income in order to maximize the spousal tax credit. This may not be advantageous in all situations, so be sure to check with your tax professional.
5. Split CPP benefit payments with a lower-income spouse in order to tax the income at a lower rate. This may help you reduce or avoid the impact of the Old Age Security (OAS) clawback.
6. Make sure additional income doesn't have a negative impact on government payments and credits you may be eligible for. Before you withdraw additional income from your RIF or other retirement plan, find out what impact it may have. For example, if your income exceeds $69,562*, you would be subject to a clawback tax on your OAS payments. Age credits, GST credits and provincial tax credits could also be affected. Check Canada Revenue Agency Tax Guides and your provincial tax office for details.
7. Maximize spousal RSP contributions for the spouse who is expected to have the lower taxable income at retirement. This will permit more retirement income to be taxed at the lower rates.
8. Apply for the GST credit every year. You may qualify after you retire, even if you didn't before.
9. Combine your - and your spouse's - charitable donations on a single tax return to maximize the tax credit.
10. Transfer unused age, pension, disability, tuition and education tax credits from the lower-income spouse to the higher-income spouse.
We’ve provided answers to some of the most common questions people have about Retirement Income Options.
Yes. Your RSPs can be converted to retirement income at any time, but no later than the end of the year in which you turn 71.
Absolutely. If you have RSPs or RIFs with other financial institutions, you can transfer them to your RIF at TD Canada Trust as long as the investments held within the RSPs/RIFs are eligible for transfer.
No. We have a variety of plans to fit all of our customers.
Your pension plan and Locked-in RSP or Locked-in Retirement Account (LIRA) can be converted for income to a Life Income Fund (LIF), Locked-in Retirement Income Fund (LRIF) or a Prescribed Retirement Income Fund (PRIF), depending upon the governing jurisdiction of the pension plan. A Restricted Locked-in Savings Plan (RLSP) can only accept money from a Restricted Life Income Fund (RLIF). These plans are similar in nature to RIFs and can provide you with the same tax deferral benefits.
There is no maximum amount you can withdraw from your RIF. For locked-in plans, payments are subject to the same minimum withdrawal limits as a RIF. However, there is also a maximum withdrawal amount based on predetermined formulas for each type of plan.
Most people choose their payment frequency based on their lifestyle and income needs. You can choose to withdraw income weekly, biweekly, monthly, quarterly, semi-annually or annually, depending on your plan.
No minimum withdrawal is required in the calendar year a RIF is set up. In each subsequent year, only the annual minimum amount is required to be withdrawn. You choose when, during the calendar year, you want to receive income.
Yes. If your spouse is younger than you are, your minimum withdrawal would be lower than if it were based on your age. You do not have to hold a spousal RIF or name your spouse as beneficiary to take advantage of this option. However, the election to use your spouse's age must be made before your first RIF withdrawal, and once made, the decision cannot be changed.
No. Your minimum annual withdrawal amount changes each calendar year according to the value of your RIF on December 31st of the previous year, the prescribed minimum withdrawal schedule, and your age or your younger spouse's age.
You can change your regular withdrawals any time you wish. You can increase your income, change the frequency of your withdrawals, or receive lump-sum payments. It's your choice. Again, the only stipulation is that you must receive at least your minimum income amount each year and not exceed your maximum for locked-in plans.
Your income can be automatically deposited to your chequing or savings account, transferred to a non-registered investment account, or received by cheque. We recommend that you consider the convenience of Direct Deposit to avoid postal delays and unnecessary trips to the branch.
If you wish to have extra tax withheld and forwarded to the Canada Revenue Agency on your behalf, you can instruct TD Canada Trust to deduct the additional tax from your regular RIF withdrawals. This could help you avoid having to make a large lump-sum payment at tax time.
There are tax considerations if your spouse contributed to your RSP, and contributions were made in the current or previous two years prior to converting to a RIF. The normal two-year attribution rule on the taxability of your withdrawals applies to your RIF as well, but only on amounts more than the minimum required amount.
For example, if your minimum RIF withdrawal amount is $1,000 and you withdraw income totaling $1,500, then $500 would be taxable in your spouse's hands if he or she made a spousal contribution of $500 or more to any spousal RSP in the year of the RIF withdrawal or in the two previous years.
When you die the balance of your RIF can be paid in a lump sum to your surviving spouse, estate, or other designated beneficiary. RIF funds may also be transferred to the registered plans of surviving spouses, dependent children, or dependent grandchildren. Or, you can designate regular RIF income to continue to be paid to your spouse.
If you designate your spouse as the successor annuitant of your RIF, your spouse will assume ownership of your plan and your regular withdrawals will continue to be paid to him or her. Even if you do not make this designation, your spouse can become the annuitant if your estate is the designated beneficiary of the RIF and the executor(s) of your estate agree(s).
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.Beneficiary
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.Canada Pension Plan (CPP)
The Canada Pension Plan is a "contributory" plan. This means that all costs are covered by the financial 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. For more information visit www.hrdc.gc.caFederal Pension Tax Credit
The first $2,000 of pension income (including earnings from retirement income plans) is eligible for a federal tax credit for annuitants aged 65 or older.Guaranteed 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 receiving the Old Age Security pension and meet the income requirements set by the government.Old 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.Post-Retirement Benefit (PRB)
The Post-Retirement Benefit (PRB) is a new lifetime benefit that comes into effect January 1, 2012. This increases a contributors retirement income and rises with increases in the cost of living. Benefits are payable the following year, starting in 2013. Contributions are mandatory for CPP and QPP retirement pension recipients aged 60 to 65 who continue working. Those at least 65 but under 70 years of age, can choose not to contribute.Quebec Pension Plan (QPP)
The QPP is the Quebec equivalent of the Canada Pension Plan (CPP). See Canada Pension Plan, above, for details.