Should I Convert My RRSP to a RRIF Early in Ontario?

For most Ontarians the honest answer is: converting early is worth considering, but the conversion itself is not what helps you — the withdrawals are. Moving money from an RRSP to a RRIF is not a taxable event and does not change how your investments are taxed, so the only reasons to do it before the December 31 deadline in the year you turn 71 are the tax features a RRIF unlocks at 65: eligible pension income, the pension income amount, and pension income splitting with a spouse. If you are under 65, or you have no spouse and no plans to withdraw, there is usually little to gain by rushing.

That is the short version. The longer version depends on your income today, your income at 72, and what happens to your Old Age Security along the way — so it is worth walking through carefully.

What actually changes when you convert

An RRSP and a RRIF hold the same investments, grow the same way, and are taxed the same way when money comes out — as fully taxable income at your marginal rate. The differences are structural.

An RRSP lets you contribute and lets you withdraw whatever you like, whenever you like. A RRIF stops accepting new contributions and requires a minimum withdrawal every year starting the year after it is opened. The Canada Revenue Agency's RRIF minimum withdrawal factors start at roughly 2.86% at age 60, rise to 4.00% at 65, 5.28% at 71, and climb to 20% at age 95 and beyond. The factor is applied to the account's fair market value on January 1.

There is no age floor for opening a RRIF. There is a hard ceiling: by December 31 of the year you turn 71, every RRSP must be converted to a RRIF, used to buy an annuity, or cashed out. Most Canadians convert. According to Statistics Canada, roughly 5.7 million Canadians reported RRSP or RRIF withdrawals in a recent tax year, and RRIFs now hold a substantial share of the registered savings held by Canadians over 70.

Marc Pineault, a retirement planner in London, Ontario, puts it this way:

"People ask me whether converting is the decision. It isn't. The decision is how much you pull out each year and at what tax rate — the RRIF is just the container that makes some of those withdrawals count as pension income."

— Marc Pineault, retirement planner in London, Ontario

The three real arguments for converting early

1. The pension income amount at 65

Starting at age 65, RRIF withdrawals count as eligible pension income. That qualifies you for the federal pension income amount — a non-refundable credit on the first $2,000 of eligible pension income — plus Ontario's own pension income credit on the provincial return. RRSP withdrawals do not qualify at any age.

The practical effect is that roughly the first $2,000 of RRIF income each year is offset by credits. A common approach among Ontarians is to convert a small slice of the RRSP — sometimes $15,000 to $30,000 — into a RRIF at 65, withdraw about $2,000 annually, and leave the rest of the RRSP untouched until 71.

2. Pension income splitting with a spouse

This is the larger lever. Once you are 65, up to 50% of eligible pension income — including RRIF withdrawals — can be allocated to a lower-income spouse or common-law partner on the tax return. On a $40,000 RRIF withdrawal by the higher-income spouse, $20,000 can be reported by the lower-income spouse instead.

In a household where one person has a workplace pension and the other does not, that reallocation can move income from a higher Ontario bracket into a lower one, and can also help both partners stay under the OAS recovery threshold. Our OAS clawback strategy guide walks through how the threshold interacts with other income sources.

3. Flattening the tax curve before 71

This is the argument that matters most for larger portfolios. If you leave a large RRSP untouched until 71, the mandatory minimums that follow can push you into a higher bracket for the rest of your life — and into OAS clawback territory.

Ontario's combined federal-provincial marginal rates in 2026 run from roughly 20% on the lowest bracket to 53.53% at the top. There is a wide gap between the bottom brackets and the middle ones, and retirement is often the only period when a household has genuine control over which bracket it lands in. Drawing registered money down deliberately in the low-income years between retirement and 71 is the core of what is usually called an RRSP meltdown — covered in depth in our RRSP meltdown guide.

A worked example: an $850,000 RRSP

Consider a hypothetical Ontario couple, both 65, retired, living in London. One spouse holds an $850,000 RRSP. Neither has started CPP or OAS yet. Household income today is about $18,000 from non-registered interest and dividends.

Path A — wait until 71. The RRSP continues growing. At a hypothetical 5% annual return with no withdrawals, $850,000 compounds to roughly $1,139,000 by age 71 ($850,000 × 1.05⁶ ≈ $1,139,000). The first mandatory RRIF minimum at 72 uses the 5.40% factor, producing a required withdrawal of about $61,500 — on top of CPP and OAS by then. Assume combined CPP and OAS of about $22,000 for that spouse. That is roughly $83,500 of taxable income before any non-registered income, sitting well into the middle Ontario brackets, and approaching the OAS recovery threshold, which for the July 2026 to June 2027 payment period begins at just over $93,000 of net income.

Path B — convert and draw from 65. The same spouse converts the full RRSP to a RRIF at 65 and withdraws $50,000 per year. Pension income splitting moves $25,000 to the lower-income spouse. Each partner now reports roughly $25,000 of RRIF income plus their share of the $18,000 non-registered income — so each lands near $34,000 of taxable income. Both sit in Ontario's lowest combined bracket territory, both claim the pension income amount, and neither is anywhere near the OAS threshold.

Over six years that is $300,000 moved out of the registered account at low rates. The RRIF balance at 71 is far smaller — roughly $760,000 at the same 5% assumption after those withdrawals — so the first mandatory minimum is closer to $41,000 than $61,500. The withdrawn money does not disappear; it can be redirected to a TFSA, where the CRA's 2026 annual contribution limit is $7,000 per person, or held in a non-registered account.

These are illustrative figures using a flat assumed return, not a projection. Real returns vary, and so does the right withdrawal number for any given household. Our free retirement planning calculators let you test different assumptions against your own balances.

The arguments against converting early

You lose flexibility. Once RRSP money is in a RRIF, you cannot put it back, and you cannot make new contributions to that account. If you are still earning employment income and have contribution room, converting everything early forecloses that.

The minimum becomes mandatory. A RRIF opened at 60 means a required withdrawal every year from 61 onward, whether you need the income or not. If your circumstances change — a large inheritance, a return to work — you are still required to take the minimum and pay tax on it.

Withdrawals may not be efficient yet. If you are 58, have significant employment income, and expect a much lower-income window at 63, withdrawing now can cost more tax than waiting. There is a real difference between converting early and withdrawing early; you only benefit from the first if you intend to do the second.

It does not solve the estate problem on its own. A RRIF is taxed at death in much the same way as an RRSP: the full value is generally included as income on the final return, unless it rolls to a surviving spouse or a financially dependent child. With Ontario's top combined rate at 53.53%, a large balance taxed in one year can be expensive. Converting doesn't fix that — drawing the balance down over twenty years at lower rates is what changes the arithmetic.

How CPP and OAS timing fits in

The conversion question is inseparable from when you start government benefits. Deferring CPP past 65 increases the monthly amount by 0.7% for each month of deferral, to a maximum of 42% more at age 70, according to the federal government's Canada Pension Plan information. Deferring OAS increases it by 0.6% per month, to a maximum of 36% more at 70.

That creates a natural pairing. Deferring CPP and OAS to 70 leaves a low-income window from retirement to 70 — exactly the years when RRIF withdrawals are taxed most lightly. Our CPP timing guide covers the trade-offs, and the RRIF withdrawal strategy guide covers how to sequence withdrawals once the RRIF exists.

One more detail worth knowing: if you are under 65 and your spouse is older, you can elect to use your younger spouse's age for the RRIF minimum calculation. That lowers the required minimum every year. The election is made when the RRIF is opened and cannot be changed afterward.

Questions worth working through

Before deciding, it generally helps to map out a few things: your projected taxable income at 72 under a do-nothing scenario, whether either spouse is likely to cross the OAS recovery threshold, whether pension income splitting would meaningfully shift income between brackets, and what your TFSA room looks like as a destination for withdrawn funds.

Marc Pineault works with households across London, Ontario and the surrounding region on exactly this kind of modelling — comparing the tax cost of withdrawing now against the tax cost of withdrawing later, over a full retirement horizon rather than a single year. The right answer for a $300,000 RRSP with a workplace pension looks very different from the right answer for a $1.5 million RRSP with no pension at all.

The short version

Converting an RRSP to a RRIF early is a tool, not a strategy. It becomes genuinely useful at 65, when RRIF income qualifies for the pension income amount and for splitting with a spouse, and it becomes most valuable when it supports a deliberate plan to draw registered money down during low-income years. For someone under 65 with no immediate withdrawal plans, there is rarely much urgency either way — the deadline at 71 will arrive on its own schedule, and the years before it are the ones where the real decisions get made.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified professional before making any financial decisions.