Retirement · 7 min read · October 12, 2026 · By

RRIF at 65: Claim the $2,000 Pension Income Credit

Most Canadians think of the RRIF as something that happens to them at 71. But if you don't have a workplace pension, converting a small slice of your RRSP to a RRIF around 65 can unlock a federal tax credit you would otherwise leave on the table every year until 71. For a couple, pension income splitting can double it. Here is how the CRA rules work, what it is worth in dollars, and the timing details that decide whether you get it.

The credit in one paragraph

The pension income amount (line 31400 of your return) is a federal non-refundable tax credit on up to $2,000 of eligible pension income per year (as of October 2026). Non-refundable credits are calculated at the lowest federal tax rate, which is 14% for 2026 (as of October 2026). So the most it can save you federally is $2,000 × 14% = $280 a year. Each province and territory has its own pension credit on top of that, with its own amount and rate: for 2025 returns, for example, the CRA lists $1,000 for British Columbia and $1,762 for Ontario. The $2,000 federal maximum is not indexed to inflation; it is not among the amounts the Income Tax Act adjusts each year.

In plain terms: if you have tax to pay, the first $2,000 of eligible pension income is roughly free of federal tax at the lowest bracket, because the 14% tax on it is offset by the 14% credit.

What counts as eligible pension income

This is where the RRIF comes in. According to the CRA, if you are 65 or older at the end of the year, eligible pension income includes:

lifetime pension payments from a registered pension plan (a workplace defined benefit pension, for example)
RRIF payments, including payments from a LIF
regular annuity payments, including RRSP annuity payments

If you are under 65, RRIF and annuity payments generally qualify only if you receive them because of the death of your spouse or common-law partner. Lifetime pension payments from a registered pension plan qualify at any age.

And these do not qualify, at any age:

Old Age Security (OAS)
Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits
Lump-sum RRSP withdrawals
death benefits and retiring allowances

The key point: money coming out of an RRSP as a lump-sum withdrawal never earns the credit. The same dollars paid out of a RRIF at 65 or older do. Same savings, same tax on the income, different credit.

Why this matters most if you have no workplace pension

Someone with a defined benefit pension already has eligible pension income from the first cheque and claims the full credit without thinking about it. A self-employed person, or anyone whose retirement savings are all in an RRSP, typically has only CPP and OAS between 65 and 71. Neither counts. If that person waits until the end of the year they turn 71 to convert, the first RRIF payment usually arrives the following year. That is seven years (the years you turn 65 through 71) with no eligible pension income and no credit.

At $280 a year federally, seven missed years is $1,960 per person in federal tax, plus the provincial credit. For a couple in the same situation, the federal figure doubles to $3,920.

The strategy: create $2,000 of RRIF income a year from 65 to 71

Nothing requires you to convert your whole RRSP at once. You can move part of it to a RRIF and leave the rest in the RRSP until the end of the year you turn 71. The idea is to open a small RRIF that pays you about $2,000 a year, just enough to use the credit, while the bulk of your savings stays put.

Two timing rules shape how you do it:

No minimum in the year the RRIF is set up. The first required minimum is in the following calendar year. If you open the RRIF in the year you turn 64, it pays its first minimum in the year you turn 65, which is the first year the payments qualify.
The minimum uses your age on January 1. Up to age 70 the factor is 1 ÷ (90 − age): 3.85% at 64, 4.00% at 65, 4.17% at 66, up to 5.00% at 70. At 71 it is 5.28%. In the year you turn 65, you are usually still 64 on January 1, so the 64 factor applies.

If you only think of this in the year you turn 65, you can still open the RRIF and ask for a $2,000 payment that year. The minimum is nil, so the whole $2,000 counts as an amount above the minimum and has 10% withheld at source ($200). That is a prepayment of tax, not an extra cost; it is settled when you file.

Worked example: a $30,000 RRIF

Diane turns 64 in 2026. She has $400,000 in her RRSP and no workplace pension. In 2026 she transfers $30,000 to a new RRIF and leaves $370,000 in the RRSP. Each year from 2027 she takes $2,000 from the RRIF, or the minimum if it is higher. The table assumes a 4% annual return and one payment at the end of each year. Minimums use the exact 1 ÷ (90 − age) factor.

Year	Age on Jan 1	Factor	Balance Jan 1	Minimum	Paid	Withheld
2027	64	3.85%	$30,000	$1,154	$2,000	$85
2028	65	4.00%	$29,200	$1,168	$2,000	$83
2029	66	4.17%	$28,368	$1,182	$2,000	$82
2030	67	4.35%	$27,503	$1,196	$2,000	$80
2031	68	4.55%	$26,603	$1,209	$2,000	$79
2032	69	4.76%	$25,667	$1,222	$2,000	$78
2033	70	5.00%	$24,694	$1,235	$2,000	$77

Withheld: 10% of the amount above the minimum (outside Quebec). Highlighted row: 2033, the year Diane turns 71 and must also convert or withdraw what is left in her RRSP by December 31. After seven payments the RRIF still holds about $23,700.

Over the seven years Diane receives $14,000 of RRIF income, all of it eligible for the credit. Her federal saving is 7 × $280 = $1,960, plus her provincial pension credit. She did it by moving less than 8% of her RRSP.

Would you rather have no withholding at all? Size the RRIF so the minimum itself is close to $2,000. At 64 the factor is 1 ÷ 26, so a balance of about $52,000 gives a first minimum of $52,000 ÷ 26 = $2,000. The trade-off is that the minimum then rises with the factor each year, so you would be drawing a bit more than $2,000 in later years.

You can model your own balance, return and province in the RRIF calculator.

For couples: pension income splitting

Spouses and common-law partners can elect to allocate up to 50% of eligible pension income to the other spouse. Both of you sign Form T1032, Joint Election to Split Pension Income, and file it with your returns. The election is made each year and the percentage can change from one year to the next. You must both be residents of Canada on December 31 and not living apart because of a breakdown of the relationship for 90 days or more that includes December 31. When the transferring spouse is 65 or older, RRIF income is eligible for splitting, and the receiving spouse can be any age.

Splitting does two things. It can move income from a higher bracket to a lower one, and it can let the receiving spouse claim their own pension income amount. But read the next part carefully, because the age rule for the second spouse is where people go wrong.

The receiving spouse's age matters for the credit

The CRA notes that pension income that qualifies for the transferring spouse's credit does not necessarily qualify for the receiving spouse's credit, because eligibility can depend on age. Form T1032 spells it out: if the receiving spouse is under 65 on December 31 and the split amount comes from RRIF payments, that split amount does not count toward the receiving spouse's pension income amount. Split lifetime pension payments from a registered pension plan are treated differently. In short: to get two credits from RRIF income, both spouses generally need to be 65 or older by the end of the year.

Two ways to get two credits

Set-up (both spouses 65+)	Spouse A claims	Spouse B claims	Federal value
A has $2,000 of RRIF income, no split	$2,000	$0	$280
A has $2,000 of RRIF income, splits 50%	$1,000	$1,000	$280
A has $4,000 of RRIF income, splits 50%	$2,000	$2,000	$560
Each spouse has their own $2,000 RRIF income	$2,000	$2,000	$560

Note the second row: splitting $2,000 does not create a second credit, it just divides one. To claim up to $560 federal combined (plus each spouse's provincial credit), the household needs $4,000 of eligible pension income, either through one spouse's larger RRIF and a 50% split, or through a small RRIF in each name. A spouse with an RRSP of their own can simply open their own RRIF; no election is needed.

If one spouse is younger, the RRIF spouse-age calculator shows how electing the younger spouse's age lowers the minimum. That election must be made before the first RRIF payment, and there is no minimum age for the spouse. We explain it in more detail in Using your spouse's age for the RRIF minimum.

The trade-offs

The income is still taxable. Every RRIF dollar is added to your income. The credit offsets tax at the lowest rate only; if your other income already puts you in a higher bracket, the $2,000 is taxed at that higher rate and the credit still saves only 14% federally.
It is a credit, not a deduction. A non-refundable credit only reduces tax you owe. If your income is low enough that you would pay no federal tax anyway, the credit is worth nothing to you.
Income-tested benefits. RRIF income raises your net income, which can reduce the federal age amount, increase the OAS recovery tax (the clawback) at higher incomes, and reduce the Guaranteed Income Supplement at lower ones. At $2,000 a year the effect is usually small, but check it with the OAS clawback calculator and the income tax calculator.
Less tax-deferred growth. Money you draw at 65 stops compounding in the plan. With $2,000 a year that cost is modest, and many retirees draw from the RRSP earlier anyway to smooth taxes before OAS and the age 71 minimums arrive.

Where the RRIF fits in your overall order of withdrawals (RRSP, TFSA, non-registered) is covered in Tax-efficient withdrawal sequencing in Canada, and the mechanics of a partial conversion in Converting part of your RRSP to a RRIF and keeping the rest.

Withholding: RRIF payments versus RRSP withdrawals

RRIF payments up to the annual minimum have no tax withheld. On the amount above the minimum, and on the full amount of a lump-sum RRSP withdrawal, the financial institution withholds federal tax at one rate based on the size of the amount: 10% up to $5,000, 20% over $5,000 up to $15,000, and 30% over $15,000. In Quebec the federal rates are 5%, 10% and 15%, and Quebec provincial tax is withheld separately.

Withholding is only an advance on your final tax. Whether too much or too little was withheld is settled on your return. It does not change whether the income is eligible for the credit: a RRIF payment above the minimum still counts as RRIF income.

Why it's important to know before 71

The 71 deadline. Your RRSP must be converted to a RRIF, used to buy an annuity, or withdrawn by December 31 of the year you turn 71. Until then you can hold an RRSP and a RRIF at the same time.
The set-up year has no minimum. Open the RRIF the year before you want regular payments, or plan a voluntary withdrawal (with withholding) in the first year.
The spouse-age election is a one-time choice. It must be made before the first RRIF payment and cannot be changed later.
The credit is use it or lose it. It applies year by year and cannot be banked for a later year. Every year from 65 to 71 without eligible pension income is a credit you don't get back.
Too much in the RRIF? Amounts above the minimum can be transferred from a RRIF back to your own RRSP, as long as you are 71 or younger at the end of the year.

This article is general information based on CRA rules as of October 2026, not personal tax or financial advice. Credit amounts, provincial rules and your own situation (other income, benefits, spouse's age) all change the result; consider speaking with a qualified advisor before acting.

Run the Numbers on Your RRIF

The RRIF Calculator computes the minimum for your age and balance, projects it year by year, and estimates withholding on amounts above the minimum for every province, including Quebec.

Open the RRIF Calculator →