RRSP and RRIF payouts: minimums, tax and timing
An RRSP is built to be paid out. How much it pays you each year depends on the balance, your returns, how long it has to last, and the minimum withdrawals the rules force once it becomes a RRIF. Every dollar that comes out is taxed as income, so the timing matters as much as the amount.
When the RRSP has to start paying
By December 31 of the year you turn 71, an RRSP must be converted to a RRIF (registered retirement income fund), used to buy an annuity, or cashed out (all of it taxed that year). Most people choose a RRIF. You can convert earlier, and many do so at 65 to use pension income splitting and the pension income amount.
RRIF minimum withdrawals
From the year after the RRIF is opened, you must withdraw at least a set percentage of the January 1 balance each year. Before 71 the percentage is 1 ÷ (90 − your age); from 71 it follows a prescribed table. You can elect to base it on a younger spouse's age to take less.
| Age on January 1 | Minimum | Age on January 1 | Minimum |
|---|---|---|---|
| 60 | 3.33% | 80 | 6.82% |
| 65 | 4.00% | 85 | 8.51% |
| 70 | 5.00% | 90 | 11.92% |
| 71 | 5.28% | 93 | 16.34% |
| 75 | 5.82% | 95 and over | 20.00% |
The minimum is a floor, not a plan. You can always take more, and in many plans taking more in your 60s, while your tax rate is lower, leaves more after tax over your lifetime (an RRSP melt-down).
Example. A $500,000 RRIF at 65 has a first-year minimum of $20,000 (4%). If the same $500,000 earns 5% a year and is paid out in level amounts over 25 years, it pays about $35,500 a year before tax (paid at each year end, no inflation increase). Your real figure depends on returns, inflation and how long the money must last, which is what a planner works out.
Withholding tax is not the real tax
No tax is withheld from the RRIF minimum. On amounts above the minimum (and on any RRSP withdrawal), the institution withholds 10% on up to $5,000, 20% on $5,000 to $15,000 and 30% above $15,000 (Quebec has its own rates). That is only a prepayment: the real tax is set on your return, at your marginal rate on all your income for the year. Many retirees ask for extra withholding or pay instalments to avoid a bill in April.
Tax points to plan around
- From 65, RRIF income qualifies for pension income splitting with a spouse and for the pension income amount.
- OAS clawback: large RRIF withdrawals can push net income above the OAS recovery threshold (about $95,300 for July 2026 to June 2027).
- At death, whatever is left in an RRSP or RRIF is taxed as income in the final return, often at the top rate, unless it passes to a spouse. Drawing it down steadily can avoid that one-year spike.
- Order with other accounts: whether to draw the RRSP before or after a TFSA or a non-registered account changes lifetime tax and the estate. There is no single right order; it depends on your balances, pensions and age.
Work out your own RRSP payout. The free Personal / Couple Planner projects RRIF minimums year by year, tests withdrawal orders by what is left after tax, runs an RRSP Melt-Down Optimizer, and can calculate the highest income your savings can sustain.
Open the Personal / Couple PlannerGeneral information for planning and education, not financial, tax or legal advice.