Amounts received from a RRIF upon the death of an annuitant can be transferred directly or indirectly to your RRSP, to your RRIF,to your PRPP, to your SPP or to buy yourself an eligible annuityif you were a qualified beneficiary of the deceased annuitant.
If you were a financially dependent child or grandchild of the deceased annuitant, you may be able to transfer the amount even if the deceased annuitant had a spouse or common-law partner at the time of death.
To transfer a refund of premiums to an RRSP, the qualified beneficiary must be 71 years old or younger at the end of the year the transfer is made.
The transfer or purchase has to be completed in the year the refund of premiums is received or within 60 days after the end of the year.
Sometimes there can be an increase in the valueof a RRIF between the date of death and the date of final distribution to the beneficiary or estate. Generally, this amount has to be included in the income of the beneficiary or the estate for the year it is received. A T4RIF slip may be issued for this amount.
If there is a decrease in the value of the RRIF between the date of death and the date of final distribution to the beneficiary or the estate, the deceased’s legal representative can ask that the amount of the decrease be carried back and deducted on thedeceased’s finaltaxreturn through a reassessment.However, if the final distributionismade in the year of death,the deductionwill be claimed when filingthe final tax return.
The amount of the deduction is the total of:
- the part of the FMV of the RRIF at the time of death included in the deceased annuitant’s death income as a result of the annuitant’s death
- allamounts received after the annuitant’s death that have been included in the recipient’s income as a taxable payment from the RRIF, other than tax paid amount(s)
- all tax paid amount(s) (see box 36 of T4RIF slip)
MINUS
- the total of all amounts distributed from the RRIF after death of the annuitant
See examples.
Generally, the deduction will not be available if the RRIF held a non-qualified investment after the annuitant dies or if the final distribution is made after the end of the year that follows the year in which the annuitant died. However, this rule may be waived to allow the deduction to deceased annuitants on a case-by-case basis.
Fill out your income tax and benefit return
The issuer who receives the transferred funds will issue a receipt to the qualified beneficiary. The beneficiary can use the receipt to claim a deduction on his or her tax return for the year the funds were received.
If you received these funds due to the death of your spouse or common-law partner, or if you were 65 or older on December 31 of the tax year in which you received the funds, reportthe amounton line 11500 of your return.
- If these funds are transferred to your RRSP, fill out and send a Schedule 7, RRSP, PRPP and SPP Contributions and Transfers, and HBP and LLP Activities, and deduct the amount on line 20800 of your return
- If the funds are transferred to a RRIF or to an annuity, deduct the amount on line 23200 of your return.
If you received these funds, other than due to the death of a spouse or common-law partner, or if you were not 65 or older on December 31 of the tax year in which you received the funds, reportthe amounton line 13000 of your return.
- If these funds are transferred to your RRSP,fill outand send a Schedule 7, RRSP, PRPP and SPP Contributions and Transfers, and HBP and LLP Activities, and deduct the amount on line 20800 of your return
- If the funds are transferred to a RRIF or to an annuity, deduct the amount on line 23200 of your return
Forms and publications
- Guide T4040, RRSPs and Other Registered Plans for Retirement
- Information Sheet RC4178,Death of a RRIF Annuitant, PRPP Member, or ALDA Annuitant
- Form T1090,Joint Designation on the Death of a RRIF Annuitant, PRPP Member, or ALDA Annuitant
- Guide RC4460, Registered Disability Savings Plan
FAQs
Amounts received from a RRIF upon the death of an annuitant can be transferred directly or indirectly to your RRSP, to your RRIF, to your PRPP, to your SPP or to buy yourself an eligible annuity if you were a qualified beneficiary of the deceased annuitant.
Who is the successor annuitant of the RRIF? ›
An annuitant can choose to have the RRIF payments continue to their spouse or common-law partner after death. If the terms of the RRIF contract or the deceased annuitant's will name the spouse or common-law partner as the successor annuitant, the spouse or common-law partner becomes the annuitant of the RRIF.
Can you designate a beneficiary for a RRIF? ›
Instead of choosing to have the RRIF payments continue to their surviving spouse or common-law partner after death, the RRIF annuitant can designate another individual as the beneficiary of any part of the RRIF property.
What happens when an annuitant dies? ›
When the annuity owner dies, the payout typically goes to the named beneficiary. Depending on the annuity contract terms, the beneficiary can receive the remaining value of the annuity either as a lump sum or as regular payments.
Who pays taxes on annuities at death? ›
Because the annuity owner invested after-tax dollars, the principal isn't taxed when distributed as a death benefit. Therefore, beneficiaries will only pay taxes on the earnings. Earnings are taxed as ordinary income and don't receive any special capital gains treatment.
What happens when a retiree dies? ›
When a participant in a retirement plan dies, benefits the participant would have been entitled to are usually paid to the participant's designated beneficiary in a form provided by the terms of the plan (lump-sum distribution or an annuity).
Which is better, successor or beneficiary? ›
The best way to describe the difference is that a beneficiary would receive the funds from the TFSA, and the deceased TFSA would be closed. A successor holder would receive the TFSA with the funds still held within it. Therefore, the successor holder would get to keep all that tax-free room as their own.
Who cannot be a designated beneficiary? ›
An eligible designated beneficiary (EDB) must be an individual, and not a nonperson entity such as a trust, an estate, or a charity (which would be not designated beneficiaries).
What are the disadvantages of RRIF? ›
Because RRIF withdrawals are considered taxable income, taking money out too early or more than you need could put you in a higher tax bracket and leave you with a larger tax bill. Withdrawals could also potentially reduce certain government benefits, like Old Age Security (OAS).
How do you report the death of an annuitant? ›
Please report it at www.opm.gov/reportdeath. If you are unable to use the website, you can report it by contacting OPM's Retirement Office at 1-888-767-6738. The phone lines are open from 7:30am to 5:00pm (Eastern Time).
A straight-life annuity payout will pay for the life of the annuitant with payments stopping upon their death. A period-certain annuity pays out for a certain period of time, meaning that if the annuitant dies during that time, payments would pass to a beneficiary for the remainder of the specified period.
Are annuities transferable to heirs? ›
When the annuity holder passes away, the ownership and any annuity death benefits are typically transferred to the designated beneficiaries based on the contract language. The process is facilitated by the annuity company and generally involves submitting a death claim and required documentation.
What happens if you don't convert RRSP to RRIF? ›
If instead of transferring into a RRIF, you choose to withdraw your RRSP as a lump sum, then it is treated as taxable income – which could result in a substantial tax hit.
Can you withdraw all funds from a RRIF? ›
There are no maximum withdrawal limits, so you can withdraw as much as you want from your RRIF each year. However, anything you withdraw above your required minimum payment amount will be subject to withholding tax.
Do beneficiaries pay tax on inheritance in Canada? ›
A common misconception among Canadians is that they can be taxed on money they inherit. The truth is, there is no inheritance tax in Canada. Instead, after a person is deceased, a final tax return must be prepared on income they earned up to the date of death.
