Budget 2007: Conversion Deadline of RPP and RRSP to RRIF extended 2 years

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In the Canadian federal Budget of 2007 (March 19, 2007) .. was a proposal to increase the conversion age for RPP’s and RRSP’s to 71 years of age from 69 years of age. Transitional measures will benefit individuals who turn 69, 70, and 71 in 2007.

Previously, at the end of your 69th year all retirement accounts are converted to RRIF accounts and must be withdrawn over time into income starting with your 70th year.

See more.. from the Highlights from federal Budget 2007

Definitions:

RRSP

A registered retirement savings plan (RRSP) is an arrangement between an individual and an issuer (an insurance company, a trust company or a bank) under which retirement income commences at maturity. Contributions are made by individuals and are deductible under the Income Tax Act. Earnings in the plan remain tax-free and payments out of an RRSP are taxable on receipt.

RRIF

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.

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