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Rollover of RRSP, RRIF or RPP to a
Registered Disability Savings Plan (RDSP)
Income Tax Act s. 60.02
Budget 2010 revised the Income Tax Act to allow a tax-deferred rollover of a deceased
individual's RRSP/RRIF or RPP proceeds to the Registered
Disability Savings Plan (RDSP) of a financially dependent infirm child
or grandchild. This was effective for deaths occurring on or
after March 4, 2010. The actual transfer to the RDSP, however, could
not be made until after June 2011.
Previously, the proceeds could
only be received on a tax-deferred basis by a financially dependent infirm
child or grandchild under 18 years of age by a transfer to the RRSP, RRIF
or eligible annuity of the child or grandchild.
Canada's Economic Recovery Act, Bill C-47, was introduced in the House
of Commons on September 30, 2010, including the legislation for the rollover to
RDSPs, and received Royal Assent (became law) on December 15, 2010.
Who is Eligible?
An eligible individual:
is a child or grandchild of a
deceased RRSP or RRIF annuitant, or
deceased RPP member
was financially dependent on the deceased, at the
time of the deceased's death, by reason of infirmity of the dependent.
What Proceeds are Eligible?
Eligible proceeds means any of
a refund of premiums from an RRSP
an eligible amount paid from a RRIF, or
a lump sump payment (other than from actuarial
surplus) from an RPP
that is received by an eligible individual as a result
of the death, after March 3, 2010, of a parent or grandparent of the
Specified RDSP Payment
A specified RDSP payment:
is an amount paid after June 2011 to an RDSP under
which an eligible individual is the beneficiary
must be designated as a specified RDSP payment by
the eligible individual
will be included in the income of the recipient
withdrawal from the RDSP
complies with the following RDSP contribution
contributions may not be made to the RDSP in
any year in which the beneficiary is not eligible for the
disability amount tax credit, or after the death of the
contributions may not be made if the beneficiary is not a
resident of Canada
contributions may not be made after the end of
the year in which the beneficiary turns 59
contributions must not exceed the lifetime
maximum of $200,000
of the plan must provide written consent for the contribution
Transitional Eligible Proceeds
Where the death of the RRSP or RRIF annuitant or RPP member occurred after 2007
and before 2011, transitional rules apply that recognize that individual estate
plans may not have been amended to reflect the new rules.
Transitional eligible proceeds include an amount received as a result of
the death after 2007 and before 2011 that is:
any of a refund of premiums from an RRSP, an
eligible amount paid from a RRIF or a lump sum payment (other than an
amount of actuarial surplus) from an RPP; or
any amount that had been rolled-over under s. 60(l)
of the Income Tax Act to the taxpayer's RRSP or RRIF (i.e., the
taxpayer claimed a 60(l) deduction for the amount), and which is
subsequently withdrawn from the RRSP or RRIF in order to make a
"specified RDSP payment".
These transitional rules apply where the deceased individual may have provided a
bequest directly to the eligible individual, to the spouse or common-law partner
of the deceased, or to another beneficiary. These rules allow this
beneficiary to contribute to the RDSP of an eligible individual. If the
bequest had been included in the income of a taxpayer, for instance the
recipient or the deceased, then a deduction will be allowed for the contribution
of the transitional eligible proceeds to the RDSP.
Where the death occurred after 2007 and before 2011, the contribution to the
RDSP must be made before 2012.