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Accounts in Canada

Every kind of account and pension the planner offers in Canada: what each one is, when money can come out, how it is taxed, and the pages we read the rules from.

Engine 2026Reviewed

Most Canadian retirement savings sit in a registered retirement savings plan (RRSP), which must turn into a registered retirement income fund (RRIF) by the end of the year you turn 71, and in a tax-free savings account (TFSA). Money that came out of a workplace pension when you left the job is usually locked in: it sits in a locked-in account and pays out through a life income fund (LIF). Everything else sits in an ordinary, non-registered account.

Each has its own row in the money step, because an RRSP or RRIF withdrawal is income that can claw back Old Age Security, and a TFSA withdrawal is not. Your statements say which kind each account is. The Canada Pension Plan, Old Age Security and a workplace pension that already pays you go in the pension step instead.

Rules as of the 2026 tax year, read from the authorities on 2026-07-29. Each account lists the pages we read it from.

Accounts you can enter

A new plan starts with 31% in Non-registered account, 52% in RRSP, 17% in TFSA, until you replace it with your own accounts. Where that split comes from: Statistics Canada, Survey of Financial Security 2023: families outside the wealthiest fifth.

Non-registered account

Interest and dividends are taxed each year, and half of any profit is taxed when you sell.

Shares, funds, bonds, GICs and savings held outside any registered plan. Interest is taxed each year in full. Dividends from Canadian companies are taxed with a credit for the tax the company already paid. When you sell, half the profit is taxed, and the plan keeps track of what you paid so only the profit counts.

The plan gives every dividend the credit for Canadian companies, where a foreign dividend gets none; the tax page says what that does. When one of a couple dies, an account passed to the partner keeps its original cost, so no tax falls due then.

How it is taxed, rate by rate, is on the tax page.

In the withdrawal orders
With the ordinary accounts
Pays out
Whenever you like
At the first death
Your partner takes it over as it stands

RRSP

You have not paid tax on this yet, so the whole withdrawal counts as income, including towards the Old Age Security clawback, and it never earns the pension income amount. It becomes a RRIF at 71, or at an earlier age you choose.

Contributions to an RRSP were deducted from your income, so every dollar that comes out is income in that year. It counts toward the Old Age Security clawback, and a plain withdrawal never earns the pension income amount at any age. A spousal RRSP goes here too, as the account of the partner it belongs to.

By law the plan must end by the end of the year you turn 71. The planner turns it into a RRIF at the age you choose, 71 if you leave it, and from then on the RRIF's yearly minimum applies.

In the withdrawal orders
With the accounts taxed on the way out
Pays out
Whenever you like
At the first death
Your partner takes it over as it stands
What the planner asks about it
  • Age it becomes a RRIF From 18 to 71. We assume 71.
Where the model simplifies

  • Each year the plan takes the legally required share out of a RRIF or life income fund: one divided by 90 less your age before 71, then a table rising from 5.28 percent to 20 percent at 95. Nothing is due in the year the fund is set up. If you elected to use a younger partner's age when you set it up, tick that on the account. An RRSP becomes a RRIF at 71, or at the earlier age you choose.

    Your real tax is lower/holders of a qualifying RRIF set up before 1993

The law behind it
ITA 146(2)(b.4), 146(8), 118(7)

RRIF

Taxed as income when it comes out, and from 65 it earns the pension income amount. A minimum must come out each year from the year after it starts.

A RRIF is where RRSP money goes to pay out. Every dollar that comes out is income, but from 65 it earns the pension income amount, a federal credit on the first 2,000 of pension income, and you can split it with a spouse or partner.

A minimum must come out each year, starting the year after the fund is set up: one divided by 90 less your age at the start of the year before 71, then a set share from 5.28% at 71 rising to 20% at 95 and over. If you chose to base it on a younger partner's age when the fund was set up, tick that on the account and the minimum is smaller.

What you do not spend of the minimum moves to your non-registered account. The law would let you put it in a TFSA if you have room there, but the plan does not track TFSA room.

In the withdrawal orders
With the accounts taxed on the way out
Pays out
At least a legal minimum every year
At the first death
Your partner takes it over as it stands
What the planner asks about it
  • Minimum based on my partner's age Off unless you turn it on.
Where the model simplifies

  • Each year the plan takes the legally required share out of a RRIF or life income fund: one divided by 90 less your age before 71, then a table rising from 5.28 percent to 20 percent at 95. Nothing is due in the year the fund is set up. If you elected to use a younger partner's age when you set it up, tick that on the account. An RRSP becomes a RRIF at 71, or at the earlier age you choose.

    Your real tax is lower/holders of a qualifying RRIF set up before 1993

  • We tax a Canadian couple as two separate people and apply pension income splitting to workplace and private pensions, which a one-pension couple elects. Withdrawals from retirement accounts are split in the proportion you give for your savings, which is right once you are both 65 if you split them evenly. The spouse or partner amount, a credit for supporting a partner with little income, is not applied, so a one-income couple is shown more tax than they pay.

    Your real tax is lower/couples where one partner has much less income than the other

The law behind it
ITA 146.3, 118(3), 118(7); ITR 7308

TFSA

Already taxed on the way in. Nothing more to pay, and it does not count towards the income that claws back Old Age Security.

A TFSA is paid into from money already taxed. Nothing is taxed while it grows or when it comes out, and withdrawals do not count toward Old Age Security, the clawback or any other income test. That last part is most of its value.

Dividends from US shares lose 15% to the United States inside a TFSA, which cannot be claimed back. That is a US tax, so the plan does not charge it.

In the withdrawal orders
With the tax-free accounts
Pays out
Whenever you like
At the first death
Your partner takes it over as it stands

LIF or other locked-in fund

Money from a workplace pension that the law keeps locked in, out of reach until 55 in most provinces. Taxed as income, with the same yearly minimum as a RRIF and a yearly maximum. A small fund can come out whole from 55.

A life income fund holds pension money that pension law keeps locked in. It goes by other names too: LRIF, RLIF or PRIF. A locked-in retirement account (LIRA) that has not become one yet has its own row, below. Nothing comes out before 55.

For tax it is a RRIF: every dollar out is income, it earns the pension income amount from 65, and the same yearly minimum applies. Pension law also caps what can come out each year. The plan uses the federal cap for every fund, worked from the balance and a long-term bond rate of 3.49% for 2026, which can be lower than a province's own cap, such as Ontario's in a year the fund earned well.

A fund worth at most 37,300 in 2026, half the year's maximum pensionable earnings, can be taken out whole from 55. The plan tests that on this account, in today's money moving with prices.

In the withdrawal orders
With the accounts taxed on the way out
Before the earliest age
Nothing comes out before 55
Pays out
At least a legal minimum every year. A small balance may be taken out whole. Up to a legal maximum every year
At the first death
Your partner takes it over as it stands
What the planner asks about it
  • Minimum based on my partner's age Off unless you turn it on.
Where the model simplifies

  • A life income fund can pay at most a yearly maximum. We use the federal formula for every fund, at the long-term bond rate published last November held steady, which is lower than Ontario's rule in a year your fund earned well. Small funds can be paid out whole from 55. A restricted federal fund's one-time unlock of half is not offered, and a cash-value life insurance policy or a prescribed annuity is entered as an ordinary account or a pension stream.

    Your real tax is lower/holders of a life income fund under a provincial rule, and of the mapped products

  • Each year the plan takes the legally required share out of a RRIF or life income fund: one divided by 90 less your age before 71, then a table rising from 5.28 percent to 20 percent at 95. Nothing is due in the year the fund is set up. If you elected to use a younger partner's age when you set it up, tick that on the account. An RRSP becomes a RRIF at 71, or at the earlier age you choose.

    Your real tax is lower/holders of a qualifying RRIF set up before 1993

The law behind it
ITA 146.3; Pension Benefits Standards Regulations 1985 s 20.1, 20.2; Ontario Reg. 909 Sch. 1.1

LIRA or locked-in RRSP

Pension money moved from a workplace plan when you left it. Nothing comes out and no minimum applies until you turn it into a LIF, from 55 and by 71 at the latest. From then on it pays like a LIF.

A locked-in retirement account (LIRA), called a locked-in RRSP in some provinces, holds pension money moved out of a workplace plan when you left it. Nothing can come out of it and no yearly minimum applies: it has to become a life income fund (LIF) first.

The planner turns the whole account into a LIF at the age you choose, from 55 and by 71 at the latest, the retirement age if you leave it. From then on it is a LIF, as the LIF row describes: the yearly maximum applies, the RRIF minimum from the following year, and every dollar out is income.

In the withdrawal orders
With the accounts taxed on the way out
Before the earliest age
Nothing comes out before the age you choose for it
Pays out
Whenever you like
At the first death
Your partner takes it over as it stands
What the planner asks about it
  • Age it becomes a LIF From 55 to 71. We assume your retirement age.
Where the model simplifies

  • A life income fund can pay at most a yearly maximum. We use the federal formula for every fund, at the long-term bond rate published last November held steady, which is lower than Ontario's rule in a year your fund earned well. Small funds can be paid out whole from 55. A restricted federal fund's one-time unlock of half is not offered, and a cash-value life insurance policy or a prescribed annuity is entered as an ordinary account or a pension stream.

    Your real tax is lower/holders of a life income fund under a provincial rule, and of the mapped products

The law behind it
ITA 146(2)(b.4); Pension Benefits Standards Regulations 1985 s 20.1

Kinds of pension

A pension paid to you as an income goes in the pension step, not here. Choose its kind there and the plan taxes it by that kind's rules; leave it on standard and it is taxed like a state or workplace pension.

Workplace pension (registered pension plan)

Taxed in full as pension income, which earns the pension credit and can be split with a spouse.

A life pension from a registered pension plan earns the pension income amount at any age, and up to half of it can be counted as a spouse's or partner's income. The plan splits it half and half.

Where the model simplifies

  • We tax a Canadian couple as two separate people and apply pension income splitting to workplace and private pensions, which a one-pension couple elects. Withdrawals from retirement accounts are split in the proportion you give for your savings, which is right once you are both 65 if you split them evenly. The spouse or partner amount, a credit for supporting a partner with little income, is not applied, so a one-income couple is shown more tax than they pay.

    Your real tax is lower/couples where one partner has much less income than the other

The law behind it
ITA 56(1)(a)(i) (superannuation or pension benefit included in income); ITA 118(7) 'pension income' (a)(i) and 118(3) (pension amount at any age); ITA 60.03 (pension income splitting)

Annuity bought with RRSP or RRIF money

Taxed in full as income.

An annuity bought with RRSP, RRIF or locked-in money, including an advanced life deferred annuity. In law it earns the pension income amount and can be split with a partner from 65, or earlier only if you receive it because your partner died. The plan gives both at any age.

Where the model simplifies

  • An annuity bought with money from registered retirement savings earns the pension income allowance and can be split with a partner only from 65, or earlier if you receive it because your partner died. A workplace pension earns both at any age. We give both to everyone, so a registered annuity received before 65 shows about 371 a year too little tax.

    Your real tax is higher/up to $371 a year/anyone under 65 receiving an annuity bought with registered retirement savings

The law behind it
ITA 146(8) and 146(1) 'benefit' (annuity payments out of an RRSP are income); ITA 146.3(5) (RRIF); ITA 118(7) 'pension income' (a)(ii) (eligible at 65+, 118(3)) and 'qualified pension income' (b) (under 65 only on a spouse's death); CRA line 31400 (T4RSP box 16 eligible at 65+, under 65 only when received on a spouse's death)

Where other things you hold go

Canada Pension Plan, Quebec Pension Plan and Old Age Security
Enter them in the pension step as your state pensions. All three are taxed as income, and Old Age Security is clawed back above an income threshold.
Defined contribution pension plans and DPSPs
Enter the balance where it will go when you leave: a locked-in plan as a LIRA, money you can transfer freely as an RRSP.
An annuity bought with taxed money (prescribed annuity)
Enter it in the pension step as a standard pension, after tax. Only the interest part of each payment is taxed, and the plan cannot split it out yet.
Segregated funds held outside a registered plan
Enter them in the non-registered account. They are taxed like an ordinary fund.
FHSA, RESP and RDSP
An FHSA you will roll into an RRSP goes in the RRSP row. An RESP is for a child's education and stays out. An RDSP is not modelled.