You have until December 31 of the year you turn 71 to close your RRSP. You have three main options when closing your RRSP:
- Convert the RRSP to a RRIF. This requires a minimum annual withdrawal, which increases as you age but gives you some flexibility. Your investments will continue to grow tax-sheltered but withdrawals are taxed as income in the year withdrawn.
- Buy an annuity. Different types of annuities provide different income streams. Payments from annuities are taxed as income.
- Take the entire RRSP as cash. Any amount you withdraw is taxed as income in the year withdrawn
You can read more about these options for getting retirement income from your RRSP. If you have contribution room, you may consider using income from one of the options above and add it to a TFSA, which grows tax free until you need the money. Speak to a registered financial advisor to determine which option is best for you based on your personal situation and financial needs.