Can an RRSP or RRIF Be Rolled Over to a Financially Dependent Child or Grandchild in Canada?
This answer covers Canadian federal tax law, which applies in every province.
Yes, but only in a narrow case. A dependent child or grandchild can defer tax by rolling over a refund of premiums within the year received or 60 days after year end. Estate payments qualify only with a joint Form T2019 from the legal representative and survivor. A child or grandchild who was not dependent can only receive the money as a taxable payment, not as a rollover.
A child or grandchild who is not infirm must have ordinarily resided with and depended on the annuitant, and their net income for the year before death must be less than the unreduced maximum basic personal amount. The income limit is higher where the child or grandchild has a mental or physical infirmity, being the basic personal amount plus the disability amount. Non-resident dependants may qualify if they received significant financial support, but a written request to the CRA tax services office is needed.
A dependent child or grandchild who is not infirm can transfer the refund of premiums only to an eligible annuity, running no more than 18 years minus their age when it is bought, with payments starting no later than one year after purchase. Whether your situation fits is worth confirming with a lawyer or accountant.
Key takeaways
- A financially dependent child or grandchild may roll over a refund of premiums even if the deceased left a spouse or common-law partner.
- A child or grandchild who is not infirm must have lived with and depended on the annuitant, with net income for the year before death below the unreduced maximum basic personal amount.
- For a child or grandchild with a mental or physical infirmity the income limit is higher, and RRSP or RRIF proceeds can be rolled to their RDSP, subject to the $200,000 lifetime RDSP limit.
- A child or grandchild who was not dependent can receive the money only as a taxable payment, not as a rollover.