- A plan participant may name a person to receive the RRSP or RRIF on death, and a will designation works only if it expressly refers to a plan.
- The fair market value of the plan at death must generally be included in the deceased's income on the final return, with exceptions for a spouse, common-law partner, or dependent child or grandchild.
- 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.
An RRSP or RRIF often holds a large part of a person's savings. After a death, the key questions are who receives the money and who pays the tax on it.
This article explains how a named beneficiary works in Ontario, how tax-deferred transfers to a spouse and some children work, and what an estate trustee should watch.
Who receives the plan: the beneficiary designation
A participant in a plan, such as an RRSP or RRIF, may designate a person to receive the benefit payable on their death. A designation made in a will is effective only if it expressly refers to a plan, either generally or specifically.
The plan administrator is discharged once it pays the benefit to the person named in the latest designation, unless it had actual notice of a later designation or a revocation. If you are a beneficiary, ask the administrator for a copy of the designation on file.
How the plan is taxed at death
The fair market value of the plan at death must generally be included in the deceased's income for the year of death, on the final return. The legal representative must file a final T1 Income Tax and Benefit Return, and a T3 return may also need to be filed for the estate.
If the plan grows in value between the death and final distribution, the increase is generally included in the income of the beneficiary or the estate in the year it is received.
Rollovers: spouse, partner, and dependent children
| Who receives it | Tax treatment |
|---|---|
| Surviving spouse or common-law partner | Can transfer on a tax-deferred basis |
| Dependent child or grandchild with a physical or mental impairment | Can receive a tax-deferred transfer |
| Dependent child or grandchild, not because of an impairment | Can only transfer the amount to a term annuity |
If the whole RRSP goes directly into the survivor's eligible plan, the survivor reports the payment and claims a deduction equal to the amount transferred.
If the estate is named as beneficiary but the spouse inherits from the estate, the legal representative and the qualifying survivor can jointly file Form T2019 to treat all or part of the estate's RRSP payments as a refund of premiums received by the spouse.
Deadlines and age limits for transfers
A qualifying beneficiary must complete a refund-of-premiums transfer to an RRSP, RRIF, PRPP, SPP or eligible annuity in the year the refund is received or within 60 days after the end of that year. To transfer into an RRSP, the beneficiary must be 71 or younger at the end of the year of transfer.
What to do next
- Find the plan statements and ask each administrator who is named as beneficiary.
- Notify the CRA of the death as soon as possible.
- Decide with an accountant whether a spousal or dependent transfer, or Form T2019, applies.
- Diarize the transfer deadline.
- Before distributing estate property, ask a lawyer about a clearance certificate.
A legal representative must obtain a clearance certificate before distributing property they control, and can otherwise be personally liable for unpaid amounts, up to the value of the property distributed. It is requested on Form TX19 only after the returns are filed and the notices of assessment received.
Frequently asked questions
Does an RRSP or RRIF go through the will?
Not if a beneficiary is validly named, since the administrator pays the person named in the latest designation. A designation made in a will works only if it expressly refers to a plan.
Who pays the tax on the RRSP?
The plan's fair market value at death must generally be included in the deceased's income on the final return. Transfers to a spouse, common-law partner or some dependent children can be tax-deferred.
What if the estate is the beneficiary but my spouse inherits?
The legal representative and the qualifying survivor can jointly file Form T2019 to treat all or part of the estate's RRSP payments as a refund of premiums received by the spouse.
What if the plan grows after death?
The increase is generally included in the income of the beneficiary or the estate in the year it is received.
Sources
- Succession Law Reform Act, R.S.O. 1990, c. S.26 (e-Laws) — Ontario e-Laws
- CRA – Transfer and report RRSPs (someone who died) — canada.ca
- CRA – RC4177 Death of an RRSP Annuitant or a PRPP Member — canada.ca
- CRA – Amounts paid from an RRSP or RRIF upon the death of an annuitant — canada.ca
- CRA – Prepare tax returns for someone who died — canada.ca
- CRA – Information Circular IC82-6, Clearance Certificate — canada.ca
- CRA – Apply for a clearance certificate — canada.ca
- CRA – Notify the CRA of the date of death — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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