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Before the end of the year in which an individual turns 71, it is mandatory to either withdraw all funds from a RRSP plan or convert the RRSP to a RRIF or life annuity. If funds are simply withdrawn from a RRSP, the entire amount is fully taxable as ordinary income; one defers this taxation by transferring investments in a RRSP into a RRIF.
The distinction between a LIRA / LRSP and a registered retirement savings plan (RRSP) is that, where RRSPs can be cashed in at any time, a LIRA / LRSP cannot. Instead, the investment held in the LIRA / LRSP is "locked-in" and cannot be removed until either retirement or a specified age outlined in the applicable pension legislation (though certain exceptions exist).
Rules determine the maximum contributions, the timing of contributions, the assets allowed, and the eventual conversion to a registered retirement income fund (RRIF), or an annuity, or the withdrawal of all funds within the RRSP, at age 71. [4]
If you want to update a cash-value life insurance policy or annuity, you may have heard of the 1035 exchange. This IRS provision, based on Section 1035(a)(3) of the IRS code, allows you to exchange...
Each annuity is a contract between you and an insurance company: You provide the company money now, and they promise to pay you a steady income later, potentially for the rest of your life.
Annuity regulation is a patchwork of state and federal oversight, from state insurance departments monitoring agents and brokers to federal agencies regulating variable annuities.
Contributions are tax-deferred. With an annuity, you won’t owe taxes on the money until you start getting payments. This means your contributions have a chance to grow tax-free, similar to a 401(k).
RRSP could be rolled over tax free in a Registered Retirement Income Fund (RRIF) a newly created investment vehicle with minimum yearly withdrawals to take until age 90. Fixed-term annuity up to age 90 could be acquired instead of life annuities. The conversion of the RRSP into annuities or RRIF must occur between ages 60 and 70 (included). [4]