The year you turn 71 is the final year you can hold your RRSP. By December 31, you must choose what to do with it. This is one of the most consequential financial decisions of your retirement — and doing nothing is the most expensive choice you can make.
The December 31 deadline — why it is non-negotiable
CRA’s rule is simple: an RRSP cannot exist past December 31 of the year you turn 71.
If you take no action:
- CRA automatically deregisters your RRSP
- The entire balance is included in your income for that tax year
- You pay tax on the full amount at your marginal rate — with no spreading allowed
- A $400,000 RRSP, for example, would generate approximately $147,000–$170,000 in federal + provincial tax, depending on your province
Act well before December 31. Many advisors recommend converting in November at the latest to avoid administrative delays.
Your three options at 71
| Option | Description | Best For |
|---|---|---|
| Convert to RRIF | Most common option; RRSP becomes a RRIF; investments stay invested; minimum withdrawals required annually | Most retirees; maintains investment growth and flexibility |
| Purchase a life annuity | RRSP proceeds used to buy a guaranteed income stream for life from an insurance company | Those who want certainty and have no desire to manage investments |
| Lump-sum withdrawal | Take all or part as cash; entire amount taxed as income immediately | Almost never optimal; only if RRSP balance is very small |
Combining options is possible. You can convert part of your RRSP to a RRIF and purchase an annuity with another portion.
Option 1: Converting to a RRIF (most common)
A Registered Retirement Income Fund (RRIF) is essentially an RRSP in reverse — the investments stay invested, but you must withdraw a minimum amount each year.
How RRIF minimum withdrawals work
| Age | Minimum Withdrawal Factor (% of Jan 1 Balance) |
|---|---|
| 71 | No minimum in year of conversion |
| 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% |
Source: CRA Interpretation Bulletin IT-500R and Income Tax Act Regulation 7308.
Using a younger spouse’s age: If your spouse is younger, you can elect to base minimum withdrawals on their age — which results in a lower minimum withdrawal each year. This is elected at the time of RRIF conversion and cannot be changed retroactively.
RRIF conversion mechanics
| Step | Details |
|---|---|
| Contact your financial institution | Request RRIF conversion — it does not require selling investments |
| Investments transfer in kind | No need to sell and rebuy; your RRSP portfolio simply moves to the RRIF |
| No tax triggered at conversion | The conversion itself is not a taxable event |
| Set up automatic minimum withdrawal | Your institution can do this automatically each year |
| Choose payment frequency | Annual, semi-annual, quarterly, or monthly withdrawals (minimum total applies regardless of frequency) |
→ See: RRSP to RRIF Conversion Guide | RRIF Minimum Withdrawal Table Canada
Option 2: Life annuity
A life annuity converts your lump sum into a guaranteed income stream for life, purchased from an insurance company.
| Annuity Feature | Detail |
|---|---|
| Payment guarantee | Payments continue for your lifetime regardless of how long you live |
| Investment risk | None — payments are fixed and guaranteed by the insurer |
| Flexibility | None — once purchased, you cannot access the capital |
| Survivor options | Joint-and-survivor annuities provide continuing payments to a spouse |
| Guarantee period | Some annuities guarantee payments for a minimum period (e.g., 10 years) even if you die earlier |
| Inflation protection | Available at higher cost; most annuities are level (not indexed) |
When annuities make sense: If you have minimal CPP/OAS relative to your expenses, have a family history of longevity, or want to eliminate investment management decisions in retirement.
→ See: RRSP Annuity Guide Canada
Tax planning after conversion
The RRIF forces an annual withdrawal that is fully taxable. With careful planning, you can minimize the lifetime tax on your RRSP/RRIF.
Strategy 1: Early RRIF conversion (before 71)
Converting your RRSP to a RRIF before 71 — even in your early 60s — allows you to take withdrawals in a deliberate, low-income year before CPP and OAS begin. This “RRSP meltdown” strategy reduces the RRIF balance that will be forced out in later years when combined income (RRIF + CPP + OAS + other pension) may push you into higher tax brackets.
| When RRIF Conversion Before 71 Makes Sense | Why |
|---|---|
| You retire before 65 and have low income years | Withdraw RRIF in low-rate gap years |
| Your projected total retirement income is very high | Reduce future RRIF forced withdrawals |
| Your OAS clawback risk is significant | Reduce RRIF balance before OAS begins |
Strategy 2: Pension income splitting
RRIF income qualifies as pension income for income-splitting purposes. You can split up to 50% of eligible RRIF income with a spouse. This is reported on Form T1032 (Joint Election to Split Pension Income).
Example: $50,000 in RRIF income + $50,000 RRIF income split to spouse = each reports $50,000. If each is in a lower bracket, the combined tax is less.
→ See: Pension Income Splitting Guide Canada
Strategy 3: OAS clawback planning
OAS is clawed back at 15 cents per dollar of net income above the threshold ($90,997 in 2026). RRIF withdrawals count as income.
| Action | Benefit |
|---|---|
| Reduce RRIF balance before OAS starts | Smaller mandatory minimum in OAS years |
| Withdraw from TFSA instead of RRIF where possible | TFSA withdrawals do not count as income — no OAS impact |
| Delay OAS to 70 | 7.2% per year increase (max 36% more at 70 vs 65) — but model with a financial advisor |
→ See: OAS Clawback and How to Reduce It
Last RRSP contribution at 71 — and the spousal RRSP exception
The last year you can contribute to your own RRSP is the calendar year you turn 71. You can make the final contribution in December of that year (and still have the account to convert by December 31).
Important: You can contribute to a spousal RRSP as long as your spouse has not yet turned 71 — even after your own RRSP is closed. If you are 71 and your spouse is 66, you can keep making spousal RRSP contributions each year until December 31 of the year your spouse turns 71, using any RRSP room you still carry from prior years.
→ See: Spousal RRSP Guide | Best Time to Convert RRSP to RRIF
Checklist for the year you turn 71
| ☐ | Task | Timing |
|---|---|---|
| ☐ | Decide: RRIF, annuity, or combination | October–November |
| ☐ | Contact financial institution to begin conversion process | November at latest |
| ☐ | Elect to use spouse’s age for RRIF minimum withdrawals (if beneficial) | At time of RRIF setup |
| ☐ | Set up automatic minimum annual withdrawal | At time of RRIF setup |
| ☐ | Make final RRSP contribution if you have room | Before December 31 |
| ☐ | Review spousal RRSP contribution opportunity | Before December 31 |
| ☐ | Confirm RRIF conversion is complete before December 31 | By December 31 |
| ☐ | Review withholding on RRIF withdrawals | January of the following year |
| ☐ | Apply for CPP if not already receiving it (if applicable) | Can apply up to 11 months before desired start |
| ☐ | Apply for OAS (if not already receiving) | January after turning 65 (can defer to 70) |