Both RRIFs and LIFs are registered income funds that pay you retirement income from accumulated savings. But they serve different pools of money, have different rules, and are used in different situations — and confusing the two causes real planning errors.
The cleanest way to read this page is beside LIF vs LIRA vs RRIF, what to do with money after retirement in Canada, and the RRIF calculator. If you are comparing locked-in pension money with standard RRSP drawdowns, also connect it with the LIRA guide and retiring on RRSP and TFSA only in Canada.
Origins: where the money comes from
| RRIF | LIF | |
|---|---|---|
| Money from | RRSP (or spousal RRSP) | Locked-in pension funds (LIRA, pension transfer) |
| Pension connection | No pension required | Must have originated from a workplace pension |
| Can accept contributions | No | No |
| Mandatory conversion from | RRSP — must convert by end of year you turn 71 | LIRA — convert when ready to draw income |
| What happens to proceeds | Fully at your discretion | Restricted to provide income for life |
How a RRIF works
When you convert an RRSP to a RRIF, you stop contributing and start drawing down. The same investments can stay inside the account — you simply change the account type.
RRIF minimum withdrawal rules
CRA requires you to take out at least a minimum amount each year, starting the year after you open the RRIF. The minimum is designed to gradually draw down the account over your lifetime.
Formula before age 71: 1 ÷ (90 − age at Jan 1)
Prescribed factors from age 71+:
| Age | Min. withdrawal % |
|---|---|
| 65 | 4.00% |
| 66 | 4.17% |
| 67 | 4.35% |
| 68 | 4.55% |
| 69 | 4.76% |
| 70 | 5.00% |
| 71 | 5.28% |
| 72 | 5.40% |
| 73 | 5.53% |
| 74 | 5.67% |
| 75 | 5.82% |
| 76 | 5.98% |
| 77 | 6.17% |
| 78 | 6.36% |
| 79 | 6.58% |
| 80 | 6.82% |
| 85 | 8.51% |
| 90 | 11.92% |
| 95+ | 20.00% |
Example: If your RRIF is worth $400,000 on January 1 at age 72, your minimum withdrawal is $400,000 × 5.40% = $21,600.
RRIF spousal election
You can base your minimum on your younger spouse’s age if they are younger. This reduces the mandatory minimum, keeping more in the account longer.
RRIF maximums
There is no maximum on RRIF withdrawals — you can take out the entire balance in one year if you choose (though the tax consequences are severe, as it all counts as income in that year).
How a LIF works
A LIF receives money from a Locked-In Retirement Account (LIRA) or directly from a workplace pension plan. The money has been locked in since it originated as pension contributions — the locked-in rules are intended to ensure the funds provide retirement income, not be cashed out early.
LIF minimum withdrawal
Same calculation as a RRIF — mandatory minimums using the same age-based percentages.
LIF maximum withdrawal
This is the key difference. Federal and provincial legislation set an annual maximum on LIF withdrawals. The maximum is calculated based on a formula using your age and a prescribed interest rate, and is intended to ensure the account lasts throughout your lifetime.
Approximate LIF maximum withdrawal rates (federal jurisdiction):
| Age | Max. % of Jan 1 balance |
|---|---|
| 55 | 6.40% |
| 60 | 6.70% |
| 65 | 7.04% |
| 70 | 7.59% |
| 71 | 7.79% |
| 75 | 8.51% |
| 80 | 9.98% |
The actual maximum percentage varies by province (BC, Ontario, Alberta, federal, etc. each have their own jurisdiction for pension regulation). The province whose pension legislation applied to the original pension determines the LIF rules — not necessarily the province you live in.
Example: $300,000 LIF at age 65 under federal rules:
- Minimum: $300,000 × 4.00% = $12,000
- Maximum: $300,000 × 7.04% = $21,120
- You must withdraw between $12,000 and $21,120 this year
Side-by-side comparison
| Feature | RRIF | LIF |
|---|---|---|
| Source money | RRSP savings | Locked-in pension (LIRA/pension transfer) |
| Minimum withdrawal | Yes — age-based percentage | Yes — same as RRIF |
| Maximum withdrawal | No — withdraw as much as you want | Yes — annual cap limits withdrawals |
| Contribute after opening | No | No |
| Can cash out entirely | Yes (subject to income tax) | No — maximum limits prevent full cash-out |
| Unlock provisions | N/A | Limited: hardship, small balance, non-residency, terminal illness |
| Surviving spouse options | Can roll to spouse’s RRSP/RRIF tax-free | Can roll to spouse’s RRSP, RRIF, or continuing LIF |
| Withdrawal withholding tax | Standard rates above minimum | Standard rates above minimum |
| Pension Income Credit | Yes — RRIF income $2,000+ | Yes — LIF income $2,000+ |
| Annuity conversion option | Yes, at any age | Yes — some provinces allow conversion at 80 |
Tax planning with RRIF and LIF
Pension income splitting
Both RRIF and LIF income (if you are 65+) qualifies for pension income splitting. You can allocate up to 50% of qualifying pension income to your spouse on your tax returns — shifting income from a higher earner to a lower earner, potentially saving thousands in taxes.
Pension Income Credit
The first $2,000 of eligible pension income (RRIF/LIF income if 65+) qualifies for the Pension Income Credit — a 15% federal non-refundable credit worth up to $300. Most provinces have a matching credit. If you have a RRIF but are not drawing enough to use the credit, consider drawing at least $2,000/year.
Minimize OAS clawback
OAS is clawed back at 15% for incomes above ~$90,997 (2025 threshold). Both RRIF and LIF mandatory withdrawals increase your reported income. Planning the timing and amount of RRIF/LIF withdrawals to stay below the OAS clawback threshold is a key retirement income strategy.
Draw down RRIF faster to reduce future mandatory minimums
Some Canadians voluntarily take more than the minimum from their RRIF early in retirement (when tax rates may be lower) to reduce the account balance — and therefore reduce future mandatory minimums, which could push them into higher brackets or trigger OAS clawback in their 80s.
LIRA → LIF conversion
When you are ready to start drawing income from a LIRA, you convert it to a LIF. Key points:
- You can convert at any age allowed by your provincial pension legislation (typically 55+)
- You do not have to convert at 71 the way you must convert an RRSP to a RRIF — LIRAs must be converted by end of calendar year you turn 71 as well
- Some provinces allow you to convert a portion of a LIF to an annuity after a certain age (often 80)
- A few provinces have a Life Retirement Income Fund (LRIF) or similar variant instead of a LIF — rules differ