A
registered retirement income fund (RRIF) is
an arrangement between a carrier (an insurance
company, a trust company or a bank) and an
annuitant under which payments are made to
the annuitant of a minimum amount each year.
The property under a fund is derived only
as a result of a transfer of funds from another
RRIF, an RRSP or a registered pension plan
and annual amounts must commence to be paid
to the annuitant immediately. Property and
earnings in a RRIF are tax-exempt and amounts
paid out of a RRIF are taxable on receipt.
Withholding
Tax on Payments from a RRIF
1)
a predetermined minimum amount must be
withdrawn from the plan every year. This
minimum is determined by a formula provided
in the Income Tax Act and is determined
at January 1 of each year;
2) the annuitant can also elect to have
any amount in excess of the minimum paid
to him or her in the year and may change
this election at any time during the year;
and,
3) income tax must be withheld at source
on amounts in excess of the minimum using
the lump-sum withholding tax rates. No
withholding is required on minimum amounts.
