What is the difference between a RRIF and a LIF in Canada?

A RRIF holds money converted from an RRSP and has mandatory minimum annual withdrawals but no maximum — you can withdraw as much as you like each year (subject to tax). A LIF holds locked-in money that originated from a workplace pension plan. LIFs have both a minimum withdrawal (same calculation as RRIF) and a maximum withdrawal each year, which limits how much you can take out. The maximum is designed to make pension money last for life, consistent with the original pension's purpose.

When do you have to convert an RRSP to a RRIF?

You must convert your RRSP to a RRIF (or buy an annuity, or do both) by December 31 of the year you turn 71. You can convert earlier — some people convert in their 60s to start drawing income. You cannot make new contributions to a RRIF (only withdrawals). Some people keep the RRSP open until age 71 to preserve contribution room and maximize tax-sheltered growth, then convert at the deadline.

What is locked-in pension money and how does it end up in a LIF?

When you leave an employer with a defined benefit (DB) or registered defined contribution (DC) pension plan before retirement age, you typically have the option to transfer your pension entitlement into a Locked-In Retirement Account (LIRA) instead of leaving it in the plan. A LIRA is like an RRSP for locked-in pension money. When you are ready to start drawing income from the LIRA, you convert it to a LIF (or sometimes a Life Retirement Income Fund / LRIF, depending on your province). You cannot freely withdraw locked-in funds the way you can RRSP/RRIF money.

What are the RRIF minimum withdrawal rates in Canada?

The minimum withdrawal percentage is based on your age at the start of the year. A formula applies until age 70: minimum = 1 ÷ (90 − your age). At 70, the percentage is exactly 5.00%. From 71 onward, CRA prescribes fixed percentages that increase with age: 5.28% at 71, 5.40% at 72, 5.53% at 73, and so on, increasing each year up to 20.00% at age 95+. You can always withdraw more than the minimum; you just cannot withdraw less without surrendering RRIF status.

Can you unlock LIF money to withdraw more than the maximum?

Yes, in limited circumstances. Provinces allow "unlocking" of LIF or LIRA funds in specific situations: financial hardship (typically income below a threshold, or high medical costs), small balance (if the locked-in account balance falls below a threshold — roughly $26,640 for a LIRA in Ontario in 2025), shortened life expectancy (terminal illness), non-residency (you have been a non-resident of Canada for at least 2 calendar years), and in some provinces, a one-time 50% unlock at age 55+. Rules vary significantly by province and the originating pension jurisdiction.

Are RRIF and LIF withdrawals taxable in Canada?

Yes, all RRIF and LIF withdrawals are fully taxable as regular income in the year you receive them. The financial institution withholds tax at source: 10% on amounts up to $5,000 above the minimum, 20% on $5,001–$15,000 above the minimum, and 30% on amounts above $15,000 above the minimum (amounts equal to the annual minimum have no withholding). You report withdrawals on your T4RIF slip. RRIF income over $2,000/year also qualifies for the Pension Income Credit (15% federal credit on the first $2,000).

Can you transfer money between a RRIF and a LIF, or vice versa?

No. RRIF money came from an RRSP (non-locked-in) and must stay non-locked-in. LIF money came from a locked-in pension source and must stay locked-in (with limited exceptions for unlocking). You cannot merge these two pools of money or transfer between them. If you have both a RRIF and a LIF, they are managed separately, each with their own minimum (and for LIF, maximum) withdrawal calculations.

Difference Between RRIF and LIF in Canada

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.

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