RRIFs and the wind-up at 71
An RRSP cannot be held past the end of the year you turn 71. It converts to a RRIF (or an annuity), and from the following year a minimum withdrawal is compulsory.
The formula
The minimum is a prescribed factor times the balance on January 1:
minimum = factor(age) × balance at January 1
The factors are the CRA's own table, in the registry with their source. They rise with age — which means the tax on a large RRIF rises with age too, whether or not the money is needed.
What the engine does
- Converts an RRSP to a RRIF at the end of the year the owner turns 71, when the account
carries an
ownerBirthYear. - Forces the minimum out each year afterwards and taxes it as income at the owner's rate.
- Warns at the conversion, because it changes the shape of every later year.
What it deliberately does not
Without a birth year on the account there is no age, so no conversion and no minimums. A plan that runs past 71 with no birth year is therefore optimistic, and the account editor says so where you enter it.