What Happens to Your RRSP at 71?

An RRSP doesn't last forever. There's a hard deadline written into the tax rules: December 31 of the year you turn 71.!The deadline is based on the year you turn 71, not your birthday. If you turn 71 in March, you still have until December 31 of that year.

Where the deadline passes, the whole account can be treated as income in a single year, which is the costliest outcome in this part of retirement planning. Handled on time, it is routine paperwork.

Here's what actually happens, and what gets weighed along the way.

Your three options

By the end of the year you turn 71, your RRSP has to become one of three things.

1. A RRIF (what most people choose)

A Registered Retirement Income Fund is the natural continuation of an RRSP. Your investments can move over as they are,!Transfers between an RRSP and a RRIF are done directly between the plans, so nothing has to be sold to make the switch. they keep growing tax-sheltered, and you simply have to withdraw at least a minimum amount each year.

2. An annuity

You hand the money to an insurance company, and it pays you a set income for life or for a fixed number of years. Predictable, but the decision is generally permanent.

3. Cash it all out

Legal, and the most heavily taxed of the three. The entire balance becomes taxable income in that one year, which can push you into the highest tax bracket and affect income-tested benefits like Old Age Security.

You can also combine them: part to a RRIF, part to an annuity.

How the minimum withdrawals work

Once you have a RRIF, you must take out at least a set percentage each year. Two things surprise people.

Nothing is required in the year you open it. The minimum starts the year after the RRIF is established.!So if you convert at 71, your first required withdrawal is in the year you turn 72.

The percentage rises every year. It's 5.28% at 72 and keeps climbing to 20% at 95 and older. The amount is worked out from your balance on December 31 of the previous year, multiplied by the percentage for your age.

Drag the sliders to see what that looks like on a real balance:

Notice the shape: the required withdrawals keep growing even though the balance is shrinking. That's the design. A RRIF is meant to be spent down.

The tax details that catch people out

The minimum is taxable, but nothing is withheld. Your financial institution doesn't hold back tax on the minimum amount, so if you have no other tax withheld anywhere, you can face a bill at filing time.!The CRA expects the tax by April 30 of the following year, unless you are required to pay by instalments. Many people ask for voluntary withholding to avoid the surprise.

Anything above the minimum is withheld at source. Outside Quebec: 10% on amounts up to $5,000, 20% above $5,000 up to $15,000, and 30% over $15,000.!Quebec rates are 5%, 10% and 15%, plus separate provincial withholding. That's a prepayment, not the final tax.

The whole RRIF is taxable at death, unless it goes to a spouse or common-law partner, or in some cases a financially dependent child. For a single person, that can mean a large tax bill in the final year.!This is one of the common reasons people hold permanent life insurance into retirement: it puts cash in the estate at the moment the tax bill arrives.

Three things that get weighed before 71

What does using a younger spouse's age do?

You can base the minimum on a younger spouse or common-law partner's age instead of your own, which lowers the required withdrawal and leaves more sheltered. The election has to be made when the RRIF is set up.!It can't be changed later, so it's worth deciding before the paperwork is signed. Tick the box in the calculator above to see the difference.

What changes if conversion starts before 71?

You don't have to wait. Converting part of an RRSP to a RRIF earlier can smooth your taxable income across more years, rather than stacking it up later when minimums are high and OAS is in the picture. It also unlocks pension income splitting with a spouse, and the pension income amount, from 65.!RRIF withdrawals generally count as eligible pension income from age 65, which is why some people convert a small amount at 65 specifically.

What happens to contributions?

The end of the year you turn 71 is also your last chance to contribute to your own RRSP. If you have unused room and income to deduct against, using it before the deadline may be worth more than it looks. If your spouse is younger than 71, you may still be able to contribute to a spousal RRSP after your own is closed.

Where the timing usually matters

• Turning 71 this year: year-end is the busiest period for financial institutions, and a missed deadline cannot be undone, so the paperwork is generally started well before December.
• In your sixties: this is the window people tend to plan in. The order accounts are drawn from, and when CPP and OAS start, usually make more difference than any single product choice.
• Helping a parent: the two questions that most often turn out to be unanswered are whether the conversion has happened at all, and whether a younger spouse's age was used.

Want a second pair of eyes on the timing? Book a free call. No obligation, and nothing is sold on a first call.

Related: TFSA vs RRSP: which comes first and, in the Discovery Lab, money through the life stages.

Sources

• RRSP options when you turn 71, Canada Revenue Agency
• Receiving income from a RRIF, Canada Revenue Agency
• Chart: prescribed factors for RRIFs, Canada Revenue Agency
• Tax rates on withdrawals, Canada Revenue Agency
• Registered Retirement Income Fund (RRIF), Canada Revenue Agency

Read September 21, 2026. General information rather than advice — the minimum withdrawal factors are set in the regulations and the figures above are current as at that date. What suits anyone at 71 depends on their other income, their spouse's age and what the money is for.