What Happens to a Deceased Person's RRSP or RRIF on the Final Tax Return in Canada?
This answer covers Canadian federal tax law, which applies in every province.
An unmatured RRSP is treated as if the deceased received the fair market value of all plan property just before death, and the T4RSP box 34 amount goes on line 12900 of the final return. For a RRIF, the fair market value (T4RIF box 18) is included unless the spousal conditions are met.
A spouse or common-law partner can defer the tax. If all RRSP property is transferred directly to the survivor's RRSP, RRIF, PRPP, SPP or an eligible annuity before the end of the year after death, no T4RSP is issued in the deceased's name and the survivor claims an offsetting deduction. A financially dependent child or grandchild with an impairment in physical or mental function may roll over to their RDSP, subject to conditions.
If distributions after death total less than the amount included in the deceased's income, the legal representative can request the difference be deducted on the final return if the final distribution is made by the end of the year after death. Which option applies depends on the plan and the beneficiary, so confirm with a lawyer or accountant.
Key takeaways
- An unmatured RRSP is treated as received at fair market value just before death, reported on line 12900 of the final return.
- A RRIF's fair market value (T4RIF box 18) is included unless the spousal conditions are met.
- A direct transfer of all RRSP property to a surviving spouse or common-law partner's plan before the end of the year after death avoids a T4RSP in the deceased's name.
- If later distributions total less than the amount included, the difference may be deducted on the final return if the final distribution is by the end of the year after death.