Generally people are living longer and more productive lives; in short, there’s more time to enjoy retirement.  Understanding your investment options will help you prepare for the future and enjoy life along the way.

What is a RRIF?

A RRIF is an investment plan, established in accordance with Government of Canada requirements, into which you can transfer registered funds (usually your RSP) without tax liability for the purpose of establishing an income stream for life.

With a RRIF, starting the year after the plan is opened, an annual minimum payment must be taken each year and is considered taxable income. The year the plan is opened a payment does not have to be made, but you are free to withdraw any amount (however, in this case, withholding tax will apply to the full withdrawal amount).

The annual minimum payment that must be taken from a RRIF each year is determined by the Income Tax Actand is based on age. Your own age or your spouse’s age can be used to calculate the annual minimum payment. Using the younger of the ages will result in a lower annual minimum payment. This means less money will have to be withdrawn and taken into taxable income for the year and more remains in the RRIF earning tax-sheltered income.

How are payments taxed?

Not unlinke your RSPs, RRIFs grow tax-deferred. The only real difference is that you’ll have to withdraw at least the annual minimum payment required under the Income Tax Act, which is taxable as income.

All payments from a RRIF must be declared as income for the year they are received. Tax must be withheld on amounts withdrawn in excess of the annual minimum amount that is required to be paid under the Income Tax Act (Canada). If you receive RRIF payments in scheduled installments, we will compute withholding tax on each individual RRIF installment payment based on the total sum of the scheduled installment payments for a calendar year and not on each individual payment. We will use the following rates to compute the withholding tax:

in excess

(except Quebec)
Up to $5,000



$5,001 – $15,000



More than $15,000



You can request to have a specific amount of tax withheld (subject to the legislated minimum). By having more tax withheld from your payments, you may avoid any last minute panic when you file your personal income tax return and find you have an amount owing.

What is a RRSP?

   A Registered Retirement Savings Plan or RRSP is an account that provides tax benefits for saving for retirement in Canada. RRSP refers to a provision in the Income Tax Act that allows a person to shelter financial property from income taxes.

RRSPs may reduce taxes in up to three ways:

  1. Contributions to RRSPs, up to limits described below, may be deducted from income before calculating income tax due.
  2. Income earned within the account (interest, corporate dividends, trust distributions, capital gains) is not taxed until money is withdrawn from the plan, allowing the plan to grow faster than the same investments would grow if they were held outside the plan and thus subject to tax.
  3. Money may be withdrawn from an RRSP in tax years when one is in a lower income-tax bracket because of lower income (due to retirement, unemployment, etc.) than tax years when one makes contributions.

Deposit Insurance: All credit union deposits are insured by DICO up to $100,000 per account, plus each registered contract is insured up to $100,000.

Types of RRSPsRRSP accounts can be setup with either one or two associated individuals:

Individual RRSP

An Individual RRSP is associated with only a single individual, termed an account holder. With Individual RRSPs, the account holder is also called a contributor, as only they contribute money to their RRSP.

Spousal RRSP

A Spousal RRSP allows a higher earner, termed a spousal contributor, to contribute to an RRSP in the spouse’s name. In this case, it is the spouse who is the account holder. The spouse can withdraw the funds, subject to tax, after a holding period. A spousal RRSP is a means of splitting income in retirement: By dividing investment properties between both spouses each spouse will receive half the income, and thus the marginal tax rate will be lower than if one spouse earned all of the income.

Group RRSP

In a group RRSP, an employer arranges for employees to make contributions, as they wish, through a schedule of regular payroll deductions. The employee can decide the size of contribution per year and the employer will deduct an amount accordingly and submit it to the investment manager selected to administer the group account. The contribution is then deposited into the employee’s individual account and invested as specified. The primary difference with a group plan is that the contributor realizes the tax savings immediately, instead of having to wait until the end of the tax year.

Deposit Insurance: All credit union deposits are insured by DICO up to $100,000 per account, plus each registered contract is insured up to $100,000.

What are Term Deposits?

Term deposits (GIC’s) are guaranteed investments suited to a wide variety of people. They offer a safe and secure way to guarantee your deposit and obtain steady growth. For those investors wishing to save for a short period of time or those saving for longer terms, this may be the perfect investment option.

Heritage Savings doesn’t just offer great term deposit rates and products – we offer individual service. If you’re considering investing in a term deposit, take the time to call your branch and speak to one of our knowledgeable staff. Tell us about your goals, and we can help customize the rate or feature of a term deposit or savings plan to meet your needs.

Terms: Available from 30 days to 5 years, with guaranteed interest or RRSP eligible Deposit

Insurance: All credit union deposits are insured by DICO up to $100,000 per account, plus each registered contract is insured up to $100,000.