What Happens to a Deceased Person's RRSP or RRIF in Ontario?
A deceased person's RRSP or RRIF is paid to the person they designated to receive it, and its fair market value at death must generally be included in their income on the final return. A participant may designate a person to receive the benefit payable on death, and a designation made in a will is effective only if it expressly refers to a plan, either generally or specifically.
Amounts paid to a surviving spouse or common-law partner can be transferred on a tax-deferred basis. A financially dependent child or grandchild with a physical or mental impairment can receive a tax-deferred transfer, while one dependent for another reason can only transfer the amount to a term annuity. If the estate is named instead but the spouse inherits from it, the legal representative and the survivor can jointly file Form T2019 to treat all or part of the payments as a refund of premiums received by the spouse.
Growth after death is generally included in the income of the beneficiary or the estate in the year it is received. A lawyer or accountant can confirm how this applies to your situation.
Key takeaways
- A plan participant may name a person to receive an RRSP or RRIF on death, and a designation in a will works only if it expressly refers to a plan.
- The plan administrator is discharged once it pays the person named in the latest designation, unless it had actual notice of a later designation or a revocation.
- The plan's fair market value at death must generally be included in income on the final return, though amounts paid to a surviving spouse or common-law partner can be transferred tax-deferred.
- A refund-of-premiums transfer must be completed in the year the refund is received or within 60 days after the end of that year.