RRIFs and tax rules upon death

Who is the successor annuitant of a RRIF?

A successor annuitant can be only the spouse or common-law partner of the account owner. If you name a successor annuitant for your RRIF, then they’ll take over the entire account when you die.

In many cases, a RRIF can be transferred to the surviving spouse or common-law partner’s RRIF on a tax-deferred basis. Depending on their age, they may also transfer the RRIF to their RRSP. The surviving spouse or common-law partner won’t require additional RRSP contribution room when the transfer happens, provided it’s completed within a certain time. Connect with an advisor for more detailed information.

Can a RRIF be transferred to a spouse at death?

Yes, a RRIF can directly transfer to a spouse or common-law partner if you’ve named them as the successor annuitant for your RRIF. In that case, they’ll take over the entire account after your death.

If you’ve named your spouse or common-law partner as the beneficiary, they’ll receive the money from your RRIF as taxable income. If they wish, they can deposit some or all of this money to their RRIF or RRSP – even if they don’t have contribution room. They can then claim a deduction for the amount they deposited. They’ll have to pay tax on the amount they didn’t deposit to their RRIF or RRSP. Connect with an advisor for more detailed information.

Can I have a beneficiary for my RRIF?

You can name a beneficiary for your RRIF in most Canadian provinces and territories¹. The beneficiary will receive the funds from your RRIF and your account will be closed.

¹ Most jurisdictions in Canada allow you to designate beneficiaries for your RRIFs. However, in Québec, you can name a beneficiary to a RRIF only for insurance contracts like insurance GICs and segregated funds. Québec doesn’t allow beneficiary designations on mutual funds, stocks, bonds and trust GICs held in a RRIF.

Can my spouse be the beneficiary for my RRIF?

Yes, you can name your spouse or common-law partner as your RRIF beneficiary. In this case, they’ll have to report the funds from the RRIF as income in their tax return. However, they can defer paying tax by depositing the funds into their own RRIF or their own RRSP if they’re under age 71.

Can a child be a beneficiary of a RRIF?

Yes, you can leave your RRIF funds to your children or grandchildren. In most cases, you’ll have to pay tax on your RRIF in your final tax return. But certain exceptions may apply depending on whether the child beneficiary is an adult, financially dependent on you and/or is a person with a disability. Speak to a tax and legal advisor to find out what works best for your unique situation.

What’s the difference between a successor annuitant and a beneficiary for a RRIF?

A successor annuitant can only be a spouse or common-law partner; when you die, they can take over your RRIF. A beneficiary is someone who gets the funds in your account, but not the account itself. You can name anyone as a beneficiary – a spouse, common-law partner, child, etc.

How are RRIFs taxed at death?

Generally, you’ll have to pay tax on your RRIF on your final tax return. But certain exceptions may apply:

• If your spouse or common-law partner is a successor annuitant, they’ll take over the account. In this case, they won’t have to pay tax on the money in the account until they withdraw funds. They’ll also be required to withdraw a minimum annual amount from the RRIF.
• If your spouse or common-law partner is a beneficiary, they can transfer the funds in your RRIF to their RRSP or RRIF. In this case, they won’t have to pay tax on the amount deposited to their RRSP or RRIF until they make withdrawals.
• If  your beneficiary is a financially dependent child or grandchild, there may be an opportunity to transfer the funds for their benefit. They may be able to defer withdrawing the money. They’ll be taxed on whatever amount they withdraw.

Connect with an advisor for more detailed information.

How much is a RRIF taxed at death?

The entire value of your RRIF will be taxed as income (like interest or salary). The exact amount of tax depends on your marginal tax rate in the year of death. You may owe a lot in taxes if the balance or Fair Market Value of your RRIF is large. Certain exceptions may apply.

Are RRIFs subject to probate?

Your RRIF may not be subject to probate if you’ve named a successor annuitant or beneficiary . However, if you don’t name a beneficiary, your RRIF may be subject to probate.

Probate is the legal process of validating a will. It applies to most provinces and territories except Quebec. Also, keep in mind that probate tax varies across provinces and territories. Learn more about how probate works.