- An RRSP is treated as received by the holder just before death, so its full value is generally taxed on the final return.
- RRSP rollover relief is available for a spouse or common-law partner and for some dependent children and grandchildren.
- How a TFSA is treated when the holder dies is not covered here, so it is worth confirming that separately rather than assuming it matches the RRSP.
Many people hold both an RRSP and a TFSA and wonder which is friendlier to the family when they die. The answer depends on the account type, who is named, and who survives you.
This article sets out how the RRSP is taxed at death and where rollovers help. TFSA treatment is a separate set of rules, so check it with a lawyer or accountant before you compare the two for your own estate.
This article covers Canadian federal tax law, which applies in every province.
How an RRSP is taxed at death
For an unmatured RRSP, the CRA treats the holder as having received, immediately before death, the fair market value of all property in the plan, and the amount is reported on the final return. It is added to the deceased's other income and taxed at graduated rates. For 2026, the federal rates run from 14% up to 33%, with provincial or territorial tax on top.
This is the key contrast with how many people think of a savings account: the full RRSP value can raise the final-year tax bill even though the money passes to someone else.
The deemed amount is shown in box 34 of a T4RSP issued to the deceased annuitant for the year of death. Income from the plan paid after death is included in the income of the designated beneficiaries or the estate; box 18 is used for a spouse or common-law partner, and box 28 for other beneficiaries or the estate.
If the plan falls in value between death and final distribution, the legal representative can ask that the decrease be deducted on the final return, using Form RC249 and a reassessment. This is generally unavailable if the plan held a non-qualified investment after death, or if the final distribution is made after the end of the year following the year of death.
Rollover options for an RRSP
| Recipient | What can happen |
|---|---|
| Spouse or common-law partner | Can avoid the deemed receipt if named sole beneficiary and all property is rolled over by December 31 of the year after death |
| Financially dependent child or grandchild | Can roll a refund of premiums into an eligible annuity |
| Child or grandchild with an impairment | Can have proceeds rolled to their RDSP, subject to the $200,000 lifetime limit |
| Non-dependent child or grandchild | Receives a taxable payment, not a rollover |
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 transfer to an RRSP requires the survivor to be 71 or younger at the end of the year of the transfer; an older survivor transfers to a RRIF or annuity instead.
A qualifying survivor is the deceased's spouse or common-law partner, or a financially dependent child or grandchild. The income limit used to test dependency is higher for a child or grandchild with a mental or physical infirmity.
RRIFs and the successor annuitant
A RRIF holder is also deemed to have received the fund's fair market value just before death. If a spouse or common-law partner is named successor annuitant, no deemed receipt applies, the RRIF continues, and the spouse is taxed only on payments they later receive.
A RRIF beneficiary who is not a successor annuitant receives a lump sum, and the tax is on the deceased's final return. A person who receives an RRSP or RRIF amount can also be jointly and severally liable for the related tax, so beneficiaries can be pursued if the estate cannot pay.
The TFSA side of the comparison
How a TFSA is treated on death is not covered in the rules described on this page. How this applies depends on your situation, so it is worth confirming with a lawyer or accountant, especially who is named and who survives you.
What to do next
- List each registered account and the beneficiary named on it.
- Note whether a spouse, common-law partner or dependent child or grandchild survives you.
- Estimate the final-return tax from your RRSP and RRIF balances.
- Ask a lawyer or accountant how your TFSA is treated and how both accounts affect the estate's cash.
- Review beneficiary designations after major life changes.
Frequently asked questions
Is the whole RRSP taxed when I die?
Generally yes. The fair market value of the plan is treated as received just before death and reported on the final return. Rollovers to a spouse or other qualifying survivors can defer or avoid that tax.
Which account has better rollover rules?
The RRSP and RRIF have defined rollover routes for spouses, some dependants and successor annuitants. For the TFSA, confirm the rules separately with a professional.
How does this affect the estate?
If the estate is the beneficiary, the RRSP value is the deceased's income and the payment forms part of the estate that bears the tax. That can strain the estate's cash.
Do I need to name a beneficiary?
The choice matters. Naming the estate or no one puts the whole value into the final return. A lawyer can help you choose designations that suit your family.
Sources
- CRA – RC4177, Death of an RRSP Annuitant — canada.ca
- CRA – Examples: Death of an RRSP or RRIF annuitant — canada.ca
- CRA – Current year tax rates and income brackets (2026) — canada.ca
- CRA – Amounts paid from an RRSP or RRIF upon the death of an annuitant — canada.ca
- CRA – RC4178, Death of a RRIF Annuitant — canada.ca
- Income Tax Act, s. 146(8.92)–(8.93) — Justice Laws (federal)
- Income Tax Act, s. 160.2 — Justice Laws (federal)
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a tax question
A tax planning consult with us is from $563.87, tax included. Third-party fees are extra.