Converting Your RRSP to a RRIF: What You Need to Know (Before It’s Mandatory)

If you’ve spent decades contributing to your RRSP, you’ve done exactly what the system was designed for:
you saved, deferred taxes, and built retirement capital.

But eventually, every RRSP has an expiry date.

As you approach retirement — or even if retirement is already underway — understanding when and how to convert your RRSP into a RRIF is critical. Done properly, it can support steady income, reduce lifetime taxes, and protect government benefits. Done poorly, it can create unnecessary tax stress and cash-flow issues.

Let’s break this down in plain language.

RRSP vs. RRIF: Same Money, Different Purpose

An RRSP and a RRIF can hold the same investments — stocks, ETFs, mutual funds, GICs, bonds — but they serve very different roles.

RRSP: Accumulation Mode

  • Designed for your working years

  • Contributions are tax-deductible

  • Investments grow tax-deferred

  • No required withdrawals

RRIF: Income Mode

  • Designed to pay you income in retirement

  • No new contributions allowed

  • Mandatory minimum withdrawals every year

  • Withdrawals are taxable income

Think of it this way:
An RRSP builds retirement wealth. A RRIF pays it out.

When Do You Have to Convert Your RRSP to a RRIF?

This part is not optional.

You must convert your RRSP by December 31 of the year you turn 71.

If you turn 71 at any point during the year — January or December — the deadline is still December 31 of that same year.

What Happens If You Miss the Deadline?

If you fail to convert:

  • The CRA treats your entire RRSP balance as taxable income

  • This can push you into the highest tax bracket

  • It may trigger OAS clawbacks and other benefit losses

This is one of the most expensive retirement planning mistakes Canadians can make — and it’s entirely avoidable.

Is Converting an RRSP to a RRIF a Taxable Event?

No — and this is a common misconception.

The conversion itself is not taxable.
You’re simply transferring your existing investments from one registered account to another.

However:

  • Every dollar you withdraw from a RRIF is taxable income

  • Withdrawals can affect:

    • Your marginal tax rate

    • OAS clawback

    • GIS eligibility

    • Other income-tested benefits

This is why withdrawal strategy matters just as much as the conversion itself.

RRIF Withdrawals: What Changes Once You Convert

1. Mandatory Minimum Withdrawals

Once you open a RRIF, you must withdraw a minimum amount every year, starting the year after conversion.

  • The minimum is based on:

    • Your age

    • Your RRIF balance on January 1

  • The percentage increases as you get older

Spousal Advantage

If you have a younger spouse, you may be able to:

  • Use your spouse’s age to calculate the minimum withdrawal

  • Reduce mandatory withdrawals

  • Defer taxes longer

This is a powerful planning tool when used correctly.

2. More Flexible Income Options

RRIFs are designed for income, so they offer features RRSPs don’t:

  • Monthly, quarterly, or annual payments

  • Predictable cash flow

  • Easier budgeting in retirement

RRSP withdrawals, by contrast, are usually manual lump sums.

Can You Convert to a RRIF Early?

Yes — as early as age 55.

Early conversion may make sense if:

  • You’re retiring before 65

  • You need structured income

  • You want to smooth taxes over multiple years

  • You plan to delay CPP and OAS

In many cases, strategic early withdrawals at lower tax rates can reduce lifetime tax and preserve benefits later.

There is no universal “right age.”
There is only the right strategy for your situation.

Can You Do a Partial RRSP-to-RRIF Conversion?

Absolutely — and this is often overlooked.

You can:

  • Convert part of your RRSP to a RRIF

  • Leave the rest inside the RRSP

  • Maintain flexibility and control over income and taxes

Partial conversions are especially useful for:

  • Early retirees

  • Tax-bracket management

  • Coordinating income with a spouse

How the Conversion Process Works

The process itself is straightforward, and your financial institution will handle the paperwork.

You’ll need to decide:

  • How much to convert (partial or full)

  • How often you want payments

  • Whether to use your spouse’s age

  • Where the RRIF will be held

If you plan to move institutions, timing matters — conversions and transfers must be coordinated properly.

RRSP to RRIF Planning Tips That Actually Matter

✔ Convert before December 31 of the year you turn 71
✔ Don’t default to minimum withdrawals without a tax plan
✔ Consider early or partial conversions
✔ Use spousal strategies where applicable
✔ Coordinate RRIF withdrawals with CPP, OAS, and TFSA income
✔ Review how withdrawals affect benefits and tax brackets

Final Thought

Converting your RRSP to a RRIF isn’t just an administrative step — it’s a major income and tax-planning decisionthat can impact the rest of your retirement.

Handled properly, a RRIF can:

  • Provide predictable income

  • Reduce lifetime taxes

  • Protect government benefits

  • Support long-term financial confidence

Handled poorly, it can quietly erode wealth year after year.

If you’re approaching this transition — or already in it — the right guidance can make all the difference.

Retirement isn’t about guessing.
It’s about clarity, planning, and confidence.

Mike Gomes, CFP