Can a Surviving Spouse Take Over the Deceased's RRSP Without Tax on the Final Return in Canada?
This answer covers Canadian federal tax law, which applies in every province.
Yes, in many cases. If all the 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 reports the payment and claims an offsetting deduction.
Without that rollover, the deceased is treated as receiving 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. A RRIF works similarly: the fair market value shown in T4RIF box 18 is included unless the spousal conditions are met. If the survivor is named successor annuitant in the contract or will, they become the annuitant and keep getting payments. Without a written election, they can still become annuitant if the legal representative consents and the carrier agrees.
Other situations exist. A financially dependent child or grandchild with an impairment may roll over to their RDSP, subject to conditions. Whether the rollover works for you depends on the plan type, how the transfer is made and the timing, so confirm the details with a lawyer or accountant before moving any funds.
Key takeaways
- A direct transfer of all plan property to the survivor's RRSP, RRIF, PRPP, SPP or eligible annuity before the end of the year after death means no T4RSP is issued in the deceased's name.
- Without a rollover, the T4RSP box 34 amount goes on line 12900 of the final return.
- A spouse or common-law partner named as successor annuitant of a RRIF becomes the annuitant and keeps getting payments.
- A financially dependent child or grandchild with an impairment in physical or mental function may qualify for a rollover to their RDSP.