Employers & Employees

Capital Group Registered Retirement Income Fund (RRIF)

The Capital Group RRIF -- or Registered Retirement Income Fund invests your money in a diverse group of investments and allows you to take it out in a steady income stream.

Typically, Canadians use RRSPs to save for the future. It's a great strategy because you save taxes at the time you buy the RRSP -- which for most of us is when we're working and earning more money. The government is happy to let that accumulate and grow your retirement savings, but only to a point. When you turn 71, Revenue Canada says that you need to get your money out of your RRSP by the end of that year. You could take it out all at once, but you'd incur a massive tax bill as it would all be treated as income.

With the Capital Group RRIF, you can take that lump sum of an RRSP and roll it into a Registered Retirement Income Fund (RRIF). You can still invest it in a series of diverse investments to continue growing your money and outpacing inflation. The federal government will require you to start taking minimum withdrawals, which will vary according to your age - the rest can stay in until you need it.

Some examples of minimum withdrawals right now:

The biggest advantage to the Capital Group RRIF is flexibility. You can roll all of your different retirement savings into one pool of money. You take out your minimums and beyond that it is up to you how much to withdraw -- you control the "tap" on how much flows out. So when you turn 71 and "RRIF Out" -- you will convert your RRSPs into something like a pension stream and you can also get out lump sums if needed.

One thing to be aware of with any RRIF, though, is that any money you take out above the minimum will be subject to withholding tax.

If you decide you don't need the money right now, you can still take out your minimum withdrawal and roll it into a tax-sheltered investment like a TFSA. You'll still pay income tax on taking it out, but it will start to grow tax free.

• Combining the benefits of mutual funds with the freedom of a Group RRIF offers you the following advantages:
• They are available to anyone with most types of retirement savings, at any age;
• They give you more choices over the investment selections you make;
• They allow greater freedom to alter your income as your needs change, subject to the minimum yearly amount you must withdraw;
• They offer more flexibility to re-balance your investments as market conditions change