RRIF / LIF

While RRSPs allow for an individual to save money and accumulate wealth in a tax sheltered investment vehicle, the RRIF is used when a person reaches the phase in retirement where they start to drawdown the funds as  a source of income. All income withdrawn from  a RRIF is taxable. Every year, based on your age, there is a minimum amount that must be withdrawn from the RRIF once it has been converted from an RRSP. There are not any maximum limits as to how much can be withdrawn. All assets still remaining in the plan after the withdrawal continue to grow tax sheltered. You can hold the same investments that were held in a RRSP but given the need for income the investments may need to be changed to be more suitable as investments could lose money in a market downturn. RRSPs mature no later than December 31st of the year the plan holder turns 71 and must be converted to a RRIF.

Locked-in Retirement accounts are funded from a transfer from a registered pension plan. Pre-retirement the funds transferred are held in a Locked in Retirement Account (LIRA) and upon retirement transferred to a Locked-in Fund (LIF),  similar to how a RRIF is created from an RRSP. Also similar to a RRIF is that there is a minimum amount that must be withdrawn from the LIF once it has been converted from a LIRA. However, unlike a RRIF, there is a maximum limit as to how much can be withdrawn. Registered plans are set up to provide employees with income for life so that is why there is a restriction on maximum withdrawals using the "locked in" provision. There are some opportunities to "unlock" part of if not all, but there is specific criteria related to this exception. All income withdrawn from  a LIF is taxable but all assets still remaining in the plan after the withdrawal continue to grow tax sheltered. You can hold the same investments that are held in a RRSP but given the need for income the investments may need to be changed to be more suitable as investments could lose money in a market downturn. Locked-in retirement savings must be converted to a LIF no later than December 31st of the year the plan holder turns 71.