Question Period Note: DEATH OF AN RRIF ANNUITANT

What happens when the annuitant of a Registered Retirement Income Fund (RRIF) dies?

• The Government of Canada has committed to making the Canada Revenue Agency fairer and more helpful.

• The Agency is client-focused and exists to serve Canadians.

• As the protection of the taxpayer information is of utmost importance, the confidentiality provisions of the Income Tax Act prevent me from discussing the specifics of any case.

However, in general, I note that:

• When the annuitant of a Registered Retirement Income Fund dies, amounts in the RRIF may become taxable.

• If the surviving spouse was the beneficiary of the RRIF, they can minimize tax by transferring some of the amount into their own RRSP.

• If the surviving spouse was not the beneficiary, they can still minimize their taxes if they are the beneficiary of the estate and file the appropriate form with the CRA

• If someone other than the spouse is named as the beneficiary of the RRIF, the surviving spouse has no claim on the RRIF amount.

Supplementary:
• The Agency works with individuals to resolve their issues as information is brought forward and on a case by case basis.

If someone is a family member of the deceased who died intestate (with no will), they can complete Form RC552, Appointing a legal representative for a deceased person, to be recognized by the Canada Revenue Agency (CRA) as the person authorized to manage the tax matters of the deceased. Follow the instructions attached to the Affidavit form and mail the completed form with the requested documents to the deceased’s tax centre.
Generally, when the annuitant of a RRIF dies, they are deemed to have received, immediately before death, an amount equal to the fair market value (FMV) of all property held in the RRIF at the time of death. The FMV of the RRIF would be reported as income on the deceased spouse’s Income Tax and Benefit Return. To minimize the tax on this amount, if the surviving spouse is the sole beneficiary of the RRIF, they can transfer the eligible portion of the RRIF property (i.e. the amount exceeding the minimum amount) into their RRSP as long as the transfer occurs by December 31st of the year following the year of their spouse’s death. The surviving spouse would receive a T4RIF slip for the amount paid out of the RRIF and a receipt for the amount transferred into the RRSP. They can use the receipt to claim a deduction on their Income Tax and Benefit Return for the year the RRIF funds were received. For more information, you can refer to our guide RC4178 Death of a RRIF Annuitant or PRPP Member.

If the taxpayer is not listed as the beneficiary of the deceased spouse’s RRIF, they can still transfer an amount from the RRIF into their RRSP if 1) they are a beneficiary of the spouse’s estate and 2) they jointly file with the deceased spouse’s legal representative Form T1090, Death of a RRIF Annuitant - Designated Benefit or Joint Designation on the Death of a PRPP Member, to designate all or part of the amount paid to the estate as a designated benefit received by the surviving spouse. The surviving spouse would receive a receipt for the amount transferred into the RRSP. They can then use the receipt to claim a deduction on their Income Tax and Benefit Return for the year the RRIF amount was received. If the surviving spouse is not listed as the RRIF beneficiary and someone else is the beneficiary who will receive all of the RRIF proceeds, the surviving spouse will not be able to transfer an amount from the RRIF into their RRSP. For more information, you can refer to our guide RC4178 Death of a RRIF Annuitant or PRPP Member.

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