Will my RRSP be taxed when I die in Ontario?

Yes, in most cases the value of an RRSP is included in the deceased's income in the year of death and taxed accordingly. The full fair market value of the RRSP on the date of death is reported on the final (terminal) tax return, and income tax is owed at the applicable marginal rate — which can be significant for a large RRSP.

There are important exceptions that can defer the tax. If the surviving spouse or common-law partner is named as the direct beneficiary (or is the successor annuitant on a RRIF), the RRSP or RRIF can typically be transferred or rolled directly to their registered plan without triggering tax immediately. Financially dependent children or grandchildren may also qualify for a rollover under certain conditions.

If the estate is named as beneficiary — rather than a person — the RRSP proceeds go through the estate, the tax is still owed on the terminal return, and the estate administration tax may also apply to those funds. Naming an appropriate individual as beneficiary is usually more tax-efficient.