What Happens to My RRSP in an Ontario Divorce?
An RRSP generally counts as property when your net family property is calculated, so it can affect the equalization payment even if it is in your name only. The spouse with the smaller net family property is entitled to one-half of the difference between the two.
Net family property is the value of what a spouse owns on the valuation date, minus debts and the net value of property owned on the marriage date. An unmatured RRSP can be transferred to a current or former spouse's plan on Form T2220 when the spouses live apart because of a breakdown and the transfer is under a court order or written separation agreement. No deduction is claimed and nothing is reported for the transfer. The equalization claim must be started by the earliest of 2 years after the divorce, 6 years after separation with no reasonable prospect of living together again, or 6 months after the first spouse's death.
Whether a spousal RRSP is treated differently, how the account is valued and how any tax on withdrawals is handled depend on the facts, so a lawyer or accountant can confirm before you move money.
Key takeaways
- An RRSP is part of what you own, so it can feed into the equalization calculation.
- An unmatured RRSP can move to a current or former spouse's plan on Form T2220 under a court order or written separation agreement.
- No deduction is claimed and nothing is reported for that transfer.
- An equalization claim must be started by the earliest of several deadlines, one being 2 years after the divorce.