- A surviving spouse or common-law partner who receives a refund of premiums can deduct it by transferring it to their own RRSP, a RRIF or an annuity.
- The transfer must be completed in the year it is received or within 60 days after the end of that year, and an RRSP transfer depends on the survivor's age at the end of the transfer year.
- Whether an estate can add a separate contribution from unused room is not something to assume; confirm it with an accountant.
When a spouse dies, the family often asks whether the executor can put money into the survivor's RRSP to cut the tax on the final return. There are really two questions mixed together: moving the deceased's RRSP money to the survivor, and using unused contribution room.
The first has clear federal rules, covered below. The second depends on facts that should be checked with an accountant, so this article is careful about where it stops.
This article covers Canadian federal tax law, which applies in every province.
The usual route: a refund of premiums rollover
A refund of premiums is an amount paid out of an RRSP as a result of the annuitant's death to the annuitant's spouse or common-law partner immediately before death, or to a child or grandchild who was financially dependent on the annuitant for support.
A qualifying survivor who receives a refund of premiums includes it in their own income, shown in box 18 of a T4RSP. A surviving spouse or common-law partner can deduct it by transferring it to their own RRSP, using line 20800 with Schedule 7, or to a RRIF or annuity, using line 23200. A rollover to an RDSP is limited to a child or grandchild who is dependent because of impairment and is the RDSP beneficiary. The statute behind this is the deduction in s. 60(l) for certain refunds of premiums transferred to a registered plan within 60 days after year end.
When this happens, the deceased's deemed final-return income is reduced by the refund of premiums paid to qualifying survivors.
Deadline and age limit
The refund-of-premiums transfer must be completed in the year it is received or within 60 days after the end of that year. A transfer to an RRSP depends on the survivor's age at the end of the year of the transfer, and a survivor past the age limit transfers to a RRIF or annuity instead. If the survivor is close to age 71, confirm the exact cut-off with an accountant.
| Survivor | Where the rollover can go |
|---|---|
| Spouse or common-law partner within the RRSP age limit at end of transfer year | Own RRSP, or RRIF or annuity |
| Spouse or common-law partner past the RRSP age limit | RRIF or annuity, not an RRSP |
| Financially dependent child or grandchild, not infirm | Eligible annuity only |
| Child or grandchild dependent because of impairment | May also roll to their RDSP, subject to the $200,000 lifetime RDSP limit |
A financially dependent child or grandchild may roll over a refund of premiums even if the deceased left a spouse or common-law partner, while a non-dependent child or grandchild can receive amounts only as a taxable payment.
Two deadlines you may see
You may come across a second timing rule. The deemed receipt on the deceased's final return does not apply where the spouse or common-law partner is designated as sole beneficiary in the RRSP contract or the will and all property is transferred to the spouse's RRSP or RRIF, or otherwise rolled over, by December 31 of the year following the year of death. The spouse then reports the amount received.
Which timing rule applies to your situation depends on how the plan is set up and who receives the money. The December 31 date is part of the rule that decides whether the deemed receipt applies at all, while the 60-day date is the deadline for completing a refund-of-premiums transfer. How each one fits your situation is worth confirming with an accountant.
When the money goes to the estate first
A payment to the estate counts as a refund of premiums only if a qualifying survivor is a beneficiary of the estate and the legal representative and the survivor jointly file Form T2019. The statute lets the legal representative and an individual designate the payment in prescribed form, and the amount is deemed received by that individual.
Sorting this out early matters, because the survivor still has to meet the transfer deadline.
What about unused contribution room and next steps
Whether the executor can make a separate contribution to the survivor's plan using the deceased's unused room, and how it would be deducted, depends on the facts. It is worth confirming with an accountant rather than assuming it works the same way as a rollover.
- Find the date of death and mark the December 31 and 60-day dates that may apply.
- Confirm the survivor's age at the end of the year of transfer.
- Check who is named as beneficiary in the plan and the will.
- Ask the institution to issue the T4RSP slips and to confirm how amounts are coded.
- If money goes to the estate, ask about Form T2019 before distributing.
- Have an accountant check the final return and the survivor's return together.
Frequently asked questions
What is the deadline to move RRSP money to a surviving spouse's plan?
A refund-of-premiums transfer must be completed in the year it is received or within 60 days after the end of that year. A separate rule for a spouse who is sole beneficiary refers to December 31 of the year following death. Confirm which applies to you.
What if the surviving spouse is 71 or older?
A transfer to an RRSP depends on the survivor's age at the end of the year of the transfer. A survivor past that limit transfers to a RRIF or annuity instead. If the survivor is right around age 71, confirm the exact cut-off with an accountant or the CRA.
Can a child get a rollover of a parent's RRSP?
Only a financially dependent child or grandchild can, and a child who is not infirm can transfer only to an eligible annuity. A non-dependent child receives a taxable payment, not a rollover.
Does the survivor pay tax on the rollover amount?
The survivor includes the refund of premiums in income, then can deduct it by transferring it to a registered plan. The deduction depends on meeting the timing rules.
Sources
- CRA – RC4177, Death of an RRSP Annuitant — canada.ca
- Income Tax Act, s. 146(1) — Justice Laws (federal)
- CRA – Amounts paid from an RRSP or RRIF upon the death of an annuitant — canada.ca
- Income Tax Act, s. 60(l) — Justice Laws (federal)
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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