What characterizes a Registered Retirement Income Fund (RRIF)?

A Registered Retirement Income Fund (RRIF) is primarily designed to convert savings accumulated in a Registered Retirement Savings Plan (RRSP) into regular retirement income. One characteristic of a RRIF is that it allows individuals to have immediate access to their funds, though there are specific guidelines for withdrawal amounts set annually.

Upon establishing a RRIF, the individual can withdraw funds whenever they choose, which makes immediate access a significant feature of this type of account. However, there are minimum withdrawal amounts that must be taken each year based on the individual's age. This flexibility in accessing funds can provide retirees with the income they need while still affording them some control over how much they withdraw.

Additional considerations include how penalties for early withdrawals and limits on access at certain ages do not apply to RRIFs in the same manner they might for other retirement accounts. Therefore, the ability to access funds immediately distinguishes a RRIF as an effective tool for managing retirement income.