How to Invest

An Investment Account is a taxable portfolio of funds and/or securities. Investment Accounts may be opened by individuals (joint or single), legal trusts, informal trusts, estates or corporations. These accounts are sometimes referred to as "non-registered accounts" to differentiate them from registered savings plans such as RRSPs and RRIFs.

“Non-registered” distinguishes these from registered plans such as RRSPs and RRIFs.

A Registered Retirement Savings Plan (RRSP) or Spousal RRSP is a registered account designated for retirement savings.

Please contact your advisor if you want to open an RRSP for a minor.

RRSP accounts benefit from advantageous tax treatment if held to retirement age.

When the owner of an RRSP reaches the age of 71, the RRSP must be closed. Many investors then choose to transfer their RRSP assets to an RRIF (Registered Retirement Income Fund) or a spousal RRIF.

If you leave an employer before you have reached retirement age, you may have to transfer the assets in your employer-sponsored Group Retirement Savings Plan (GRSP) or pension plan to a Locked-in Retirement Savings Plan. Depending on the applicable provincial pension legislation, this plan may be called an LRSP or a LIRA.

You retain control over how your LIRA or LRSP is invested, subject to specific restrictions under the Income Tax Act.

Until you reach retirement age (as specified by your original pension plan), you are not permitted to draw on these funds. If you wish to receive income from the plan, you may be eligible to transfer the assets to another acceptable locked-in vehicle that can pay out income, such as an LIF (Life Income Fund) or an LRIF (Locked-in Retirement Income Fund). In any case, when you reach the age of 71, you must transfer the assets from your LRSP or LIRA to a LIF or LRIF.

Individuals who hold RRSPs, Spousal RRSPs and Group RRSPs are required by law to close these plans no later than the last day of the year in which they turn 71. Many individuals choose to transfer these RRSP assets to a RRIF or Spousal RRIF.

The RRIF pays out a prescribed mandatory minimum payment each year, but there is no maximum annual withdrawal limit. Withdrawals from a RRIF over the prescribed minimum amount are subject to withholding taxes imposed by Canada Revenue Agency (CRA).

Many investors find the transition from an RRSP to a RRIF somewhat confusing. We will be pleased to advise you on how RRIFs work, what regulations they are subject to, and what investment options you have within your RRIF account. Please contact one of our Financial Advisors in Global Maxfin Inc. and they will be happy to guide you through the process.

When you retire, or at the latest when you reach the age of 71, you may transfer assets from your LRSP, LIRA, GRSP (locked-in) or employer-sponsored pension plan to a LIF or LRIF, depending on the applicable provincial pension legislation.

The difference between the RRIF and the LIF/LRIF is that the RRIF is used for transferring individual RRSP assets and the LRIF/LIF is used for transferring GRSP or other employer sponsored pension assets. These assets may have been held in an LRSP or LIRA before being transferred.

The LIF is available in all jurisdictions (except in PEI). The LRIF is available for plans under the jurisdiction of Ontario, Manitoba, Saskatchewan and Newfoundland.

Both the LIF and the LRIF require a prescribed mandatory minimum income withdrawal and an optional maximum income withdrawal each year. Conversion to an annuity is not mandatory for an LRIF.

However, for the LIF in New Brunswick, at the age of 90, you must transfer the remaining assets in the plan to an annuity. For the Federal LIF, and the LIF in BC, QC, NS, MB, and AB, an annuitant can hold a LIF for their lifetime and is no longer required to convert the LIF to an annuity at age 80.

You retain control over how your LRIF/LIF is invested, subject to specific restrictions under the Income Tax Act.