Taxes and Retirement

Q.1. What is a Registered Retirement Income Fund (RRIF)?

A Registered Retirement Income Fund is a plan that holds your retirement savings and provides you with income after you retire. It is like a reverse RRSP in that you withdraw money instead of saving. There are rules about how much you can take out each year.

Q.2. How do taxes work on a RRIF?

You will pay taxes on payment from a RIFF at the same rate you will pay for pension income. The rate you will pay will depend on your marginal tax rate, that is, the rate of tax you will pay which is determined by your level of income.

Q.3. How do taxes work on my registered retirement saving?

Registered Retirement Savings Plans are sheltered funds in that they have been growing tax free until you take them out of the fund. You do not have to pay capital gains tax on this money, but you may have to pay income tax on any money that you take out of a registered plan, including any money coming from your workplace pension plan or an annuity which you bought with sheltered funds.

Q.4. How do taxes work on my unsheltered savings?

Unsheltered savings are those for which you have had to pay taxes on both your savings and the money you made investing in them. Because you have already paid taxes on this money there are no additional taxes that need be paid.