UNIT 5 Flashcards
Registered Retirement Income Fund RRIF
o A trust that is registered with Canada revenue agency to provide annuitant with retirement income
Governed by Income tax act
funds rolled over on tax deferred basis from RRSP
age limit- year annuitant turns 71
Similar to RRSP
SAME INVESTMENT RULES- except RRIF minimum withdrawal rules
Options for maturing RRSP
§ Withdraw funds in the RRSP in cash
§ Use proceeds in RRSP to buy registered annuity
§ Take advantage of tax deferred rollover provision by trf RRSP proceeds to RRIF
Quaifying RRIF
- set up in 1992 or earlier + no funds or property trfd or contributed to it at anytime after 1992
- after 1992- may be considered qualifying property if only funds rec’d were directly trfsd from qualifying RRIF
NON qualifying RRIF
any RRIF established in 1993 or later or established before 1992 and
received trf of property from anything other than qualifying RRIF
Designated death benefit
lump sum amt they are entitled to receive from RRIF as result of death of annuitant
-MAY contribute directly or indirectly to RRIF some/all amount that they receive or considered to receive as designated death benefit
withdrawals from RRIF
-must withdraw minimum amt from RRIF each year
-calculated as: % of FMV of RRIF bgn of year
tied to age of annuitiant at time or age of younger spouse
-no limits on max withdrawal unless locked in acct
Minimum RRIF withdrawals prior to age 71
o If RRIF established prior to age 71- minimum RRIF withdrawals percentage calculated as : [1/ (90- age of annuitant at bgn of year)]
· Minimum RRIF withdrawals as of age 71
o Annuitant attains age 71- instead of using formula above, refer to schedule of RRIF factors that prescribe mandatory withdrawal %
RRIF income attribution
same as RRSP rules:
o Excess amount (above min) that spouse receives from spousal RRIF OR
o Amount by which any deemed receipts on deregistration of spousal RRIF exceeds minimum amount for the year from RRIF
Attribution rules do not apply if:
o Taxpayer and spouse are living separate and apart b/c because broke up
o Taxpayer or spouse non residents
o Amt is commutation pmt received for RRSP or RRIF, trfd directly for the spouse to another RRSP, RRIF, or to an issuer to buy eligible annuity that can’t be commuted for at least 3 years
·
-Rule also doesn’t apply if:
o Contributor dies in year pmt received
o To amounts that a deceased annuitant is considered to have received as result of death.
Transfers to other registered Plans
· Transfers can only be done on tax deferred basis if trf directly from 1 registred plan to another.
· If taxpayer receives any pmt- must incl it in income for year payment received or tax deferred basis lost
Trf property from RRIF to RRSP
annuitant must first withdraw minimum amount from RRIF for the year
o Exception- amts trf from RRIF upon death of annuitant
-Beneficiary may receive pmt directly and later contribute to RRSP, RRIF or annuity, BUT contributions must be made during the year, no later than 60 days after end of the year
RRSP/RRIF proceeds on death
-value of RRSP/RRIF incl in deceased income for year died
Successor Annuitant:
- Tax payer is annuitant of RRIF, but can elect to have pmts from RRIF continue to spouse when dies
- SPOUSE becomes SUCESSOR ANNUITANT
· Designated Benefit:
- Taxpayer may name spouse as beneficiary of all/part of RRIF property
- Amount that surviving spouse receive called designated benefit
- Similar to refund of premiums from RRSP
