What has to happen before December 31 of the year you turn 71
An RRSP cannot outlive the year its owner turns 71. There are three ways to close it, one deadline, and one way to keep contributing that many couples overlook.
Most RRSP deadlines are soft. Miss the contribution date and there is always next year. The one at 71 is different. A registered retirement savings plan cannot continue past the end of the year its owner turns 71, and the decision about what replaces it has to be made, and carried out, by December 31.
That sounds distant until it is not. For anyone born in 1955, the deadline is the last day of this year. For anyone born in 1956, it is December 31, 2027. The choice itself is usually straightforward. The trouble comes from leaving it to the final weeks, when financial institutions are busy and offices close for the holidays.
Filled square: the next date. Day counts update daily from today’s date.
The rule in one sentence
The Canada Revenue Agency puts it plainly: December 31 of the year you turn 71 is the last day you can contribute to your RRSPs, and in that year you have to choose to withdraw them, transfer them to a registered retirement income fund (RRIF), or use them to buy an annuity. A combination of the three is also possible.
Note that the usual 60-day window into the new year, which lets most people make RRSP contributions until early March, does not help here. Once the plan has matured, there is no RRSP left to contribute to.
Three ways to close an RRSP
| Option | What happens | Tax at the time |
|---|---|---|
| Withdraw | The money is paid out to you | The amount is taxable income for that year, and tax is withheld on the payment |
| Transfer to a RRIF | The savings stay invested and tax-sheltered; you draw an income from the following year | No tax withheld on a direct transfer |
| Buy an annuity | The savings purchase a regular income for life or a fixed term | No tax withheld on the purchase; the annuity payments are taxed as received |
A full withdrawal is rarely chosen for a large plan, because the whole balance lands in a single tax year. That can push income into higher brackets and, for many people, into the range where the Old Age Security recovery tax applies. The RRIF is the most common route because it keeps the flexibility of an RRSP while spreading the tax over many years.
The RRIF route and its yearly minimum
A RRIF must pay out at least a minimum amount every year, starting in the year after the RRIF is established. The minimum is a percentage of the fund's value at the start of the year, set by a prescribed factor. Up to age 70 the factor is 1 divided by (90 minus your age); from 71 the CRA publishes a table.
| Age | Minimum, % of value |
|---|---|
| 65 | 4.00% |
| 70 | 5.00% |
| 71 | 5.28% |
| 72 | 5.40% |
| 75 | 5.82% |
| 80 | 6.82% |
Two practical points follow. There is no minimum in the year the RRIF is set up, so converting in, say, November does not force a withdrawal before December 31. And the minimum can be calculated on a younger spouse's age instead, which lowers it; this generally has to be chosen before the first payment, so it is worth raising with the plan issuer at the time of conversion.
Worked example · illustrative onlyA hypothetical saver born in 1955 has $200,000 in an RRSP and turns 71 in 2026. The balance is invented and assumed not to move, to keep the arithmetic visible.
- Withdraw it all in 2026: $200,000 is added to 2026 income, on top of CPP and OAS.
- Transfer to a RRIF in 2026: no tax on the transfer and no withdrawal required in 2026. If they are still 71 at the start of 2027, the 2027 minimum is 5.28% × $200,000 = $10,560.
- Buy an annuity: the $200,000 buys an income stream on the terms of the contract; the payments are taxed as they arrive.
None of this is a recommendation. It shows why the choice changes the tax year in which the money is counted.
The last contribution, and the spousal exception
December 31 of the year you turn 71 is the last day for contributions to your own RRSP. It is not necessarily the last day for RRSP contributions in the household. If you still have contribution room, for example from earned income, the CRA allows you to contribute to a spousal or common-law partner RRSP as long as your spouse is 71 or younger on December 31 of the year you contribute. A couple with an age gap can keep using the older partner's room for several more years.
Leave room in the calendar
Conversions take paperwork, and institutions see a rush in December. A sensible sequence for the year you turn 71:
- Early autumn: ask each RRSP issuer what they need and by when; the internal cut-off can be well before December 31.
- October or November: make any final contribution to your own RRSP, then sign the conversion instructions.
- December: confirm in writing that each plan has been converted, and decide how often the RRIF should pay and whether extra tax should be withheld.
Who this matters for, and what to check
- Anyone born in 1955 or 1956. The deadlines are December 31, 2026 and December 31, 2027 respectively.
- Anyone with more than one RRSP. Each plan has to be dealt with; one forgotten account at a former employer's group plan is a classic problem.
- New RRIF holders. RRIF income received at 65 or older qualifies for the pension income amount, one of the changes covered in why turning 65 sets off several changes at once. Minimum withdrawals can also create a balance owing; see the quarterly instalment reminders.
- Everyone at year-end. The RRIF minimum must be withdrawn by December 31 each year, one item on the year-end money checks.
The short version
The RRSP ends with the year you turn 71. Withdraw, convert to a RRIF, buy an annuity, or combine them, and do it early enough that the institution can process it before December 31. If your spouse is younger and you still have room, the spousal RRSP stays open until their own 71st year.
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Official sources
- Canada Revenue Agency, RRSP options when you turn 71, the December 31 deadline, the three options, spousal RRSP contributions, RRIF minimum from the following year
- Canada Revenue Agency, Chart of prescribed factors for RRIFs, minimum withdrawal factors by age
- Canada Revenue Agency, Spousal or common-law partner RRSPs, contributing after you turn 71
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