RRSP / Spousal RRSPs

A Registered Retirement Savings Plan (RRSP) or Spousal RRSP is a registered account designated for retirement savings.

RRSPs are available to investors under the age of 71, 

When the owner of an RRSP reaches the age of 71, the RRSP must be closed. Many investors then choose to transfer their RRSP assets to an RRIF (Registered Retirement Income Fund) or a spousal RRIF.

Their are many advantages to RRSPs but most financial services institutions don't tell you the negative.  They are not for everyone and if not properly planned can hurt you financially in the short and long run.  Even the type of investment you choose for your RRSP can be detrimental.  Contact us to find out the pros of cons of this complex vehicle.

LRSP (Locked-in Retirement Savings Plan) Account or LIRA (Locked-in Retirement Account)

If you leave an employer before you have reached retirement age, you may have to transfer the assets in your employer-sponsored Group Retirement Savings Plan (GRSP) or pension plan to a Locked-in Retirement Savings Plan. Depending on the applicable provincial pension legislation, this plan may be called an LRSP or a LIRA.

Until you reach retirement age (as specified by your original pension plan), you are not permitted to draw on these funds. If you wish to receive income from the plan, you may be eligible to transfer the assets to another acceptable locked-in vehicle that can pay out income, such as an LIF (Life Income Fund) or an LRIF (Locked-in Retirement Income Fund). In any case, when you reach the age of 71, you must transfer the assets from your LRSP or LIRA to a LIF or LRIF.

RRIF (Registered Retirement Income Fund)

Individuals who hold RRSPs, Spousal RRSPs and Group RRSPs are required by law to close these plans no later than the last day of the year in which they turn 71. Many individuals choose to transfer these RRSP assets to a RRIF or Spousal RRIF.

The RRIF pays out a prescribed mandatory minimum payment each year, but there is no maximum annual withdrawal limit. Withdrawals from a RRIF over the prescribed minimum amount are subject to withholding taxes imposed by Canada Revenue Agency (CRA).

Learn more

Many investors find the transition from an RRSP to a RRIF somewhat confusing. We will be pleased to advise you on how RRIFs work, what regulations they are subject to, and what investment options you have within your RRIF account.  We are here to educate you on the difference and find out what works best for your financial situation based on your goals.

Beach at sunsetLIF (Life Income Fund) or LRIF (Locked-in Retirement Income Fund) Account

When you retire, or at the latest when you reach the age of 71, you may transfer assets from your LRSP, LIRA, GRSP (locked-in) or employer-sponsored pension plan to a LIF or LRIF, depending on the applicable provincial pension legislation.

The difference between the RRIF and the LIF/LRIF is that the RRIF is used for transferring individual RRSP assets and the LRIF/LIF is used for transferring GRSP or other employer sponsored pension assets. These assets may have been held in an LRSP or LIRA before being transferred.

Both the LIF and the LRIF require a prescribed mandatory minimum income withdrawal and an optional maximum income withdrawal each year. Conversion to an annuity is not mandatory for an LRIF.

You retain control over how your LRIF/LIF is invested, subject to specific restrictions under the Income Tax Act.

 

Links

Below is a list of all investments vehicles we can help you utilise to get the most out of your money.  Please click on the links below to find out more information about what Twin Power Financial can do for you.