Can an RRSP or RRIF be rolled over to a disabled child's RDSP in Canada?
This answer covers Canadian federal tax law, which applies in every province.
Yes, in some cases. RRSP or RRIF proceeds can be rolled over to the RDSP of a child or grandchild who was dependent on you because of impairment in physical or mental functions, as long as that child or grandchild is the RDSP beneficiary. This is allowed even if you leave a spouse or common-law partner.
The rollover is deducted on line 23200, is available since July 1, 2011, and is subject to the $200,000 lifetime RDSP limit. For dependence, the income limit for a child or grandchild with an infirmity is higher: the basic personal amount plus the disability amount. A non-dependent child or grandchild receives amounts only as a taxable payment.
If the funds are paid to your estate, a qualifying survivor must be an estate beneficiary, and the legal representative and survivor must jointly file Form T2019 for it to count as a refund of premiums. For a RRIF, the joint designation is made on Form T1090. Whether your situation qualifies depends on the facts and the plan, so confirm with a lawyer or accountant.
Key takeaways
- RRSP or RRIF proceeds can be rolled over to the RDSP of a child or grandchild dependent because of impairment, if that person is the RDSP beneficiary.
- The rollover is subject to the $200,000 lifetime RDSP limit.
- A financially dependent child or grandchild may roll over funds even if the deceased left a spouse or common-law partner, while a non-dependent child or grandchild receives only a taxable payment.
- If the money is paid to the estate, the legal representative and the survivor jointly file Form T2019 for an RRSP, or Form T1090 for a RRIF.