All About Estates

What Happens when a Taxpayer Dies with a Registered Retirement Savings Plan?

Today’s blog was written by Pritika Deepak, Associate at Fasken LLP.

Dealing with the tax implications arising upon an individual’s death is a central theme in estate planning. These tax implications may differ depending on the assets and properties that an individual owns at death, as well as the individual’s registered tax plans. This three part series will provide a high level overview of certain tax implications and considerations relating to the treatment at death of: (1) Registered Retirement Savings Plans (“RRSPs”); (2) life insurance policies; and (3) shares in the capital of a private corporation.

We begin with RRSPs.

What is a RRSP?

In very simple terms, a RRSP is a registered retirement savings vehicle that allows individuals (referred to as annuitants) to invest in certain qualified investments during their working years in order to build savings for retirement. Generally, investments held within a RRSP grow on a tax-deferred basis for the annuitant, with tax payable when the annuitant makes withdrawals from the RRSP, other than in certain prescribed circumstances. 1

RRSPs are governed by a fairly complex set of rules contained in the Income Tax Act (Canada) (the “ITA”). These rules limit the amount of annual contributions that an individual can make to a RRSP to that individual’s “deduction limit” (which is more commonly referred to as “contribution room”). The contribution room available to each individual is generally outlined in the Notice of Assessment (or Reassessment) provided by the CRA to the individual and is generally equal to 18% of a year’s “earned income”, plus the aggregate of any unused contribution room from prior years. Amounts contributed toward a RRSP can be deducted from the individual’s taxable income for the year of contribution. In addition, investment income, including gains, earned in respect of a RRSP’s investments can grow tax-deferred until withdrawals are made.

Tax Consequences on Death

(i) RRSP Contributions and Withdrawals in the Year of Death

Any contributions (within the individual’s available contribution room) made by the deceased taxpayer before the date of death can be claimed as a deduction from the taxable income in the deceased’s terminal return. Further, if the deceased has a surviving spouse, contributions can be made by the estate to the surviving spouse’s RRSP within 60 days of the end of the calendar year of death, and a similar deduction can be claimed in the deceased’s terminal return.

Any withdrawals made by the individual before death are included as income in the terminal return.

(ii) RRSP Value Remaining at Death

The general rule in the ITA for an ‘unmatured’ RRSP provides that the where a RRSP annuitant dies, the annuitant is deemed to have received, immediately before death, a benefit equal to the fair market value (“FMV”) of all the property of the RRSP at the time of death. For a ‘matured’ RRSP, the benefit is equal to the FMV of the annuity payments. The amount of the benefit is included and reported as income in the deceased’s terminal return. 2

A number of factors will affect the tax treatment of the remaining value in the RRSP at the time of death including:

  • whether the RRSP has ‘matured’;
  • whether the deceased is survived by a spouse, common-law partner, financially dependent children or grandchildren; and
  • whether the deceased made any beneficiary designations with respect to their RRSP.

A RRSP that has ‘matured’ is one that is paying income to the annuitant. If a RRSP has matured and the annuitant dies with a surviving spouse/common-law partner named as the designated beneficiary, there is generally no benefit in respect of the RRSP is included as income in the deceased’s terminal return and any amounts of the RRSP that are payable to the surviving spouse will generally be taxed in the spouse’s hands for the year in which they are received. Where the annuitant dies before the RRSP matures, and the designated beneficiary is a spouse/common-law partner, the benefit in respect of the RRSP will be included in the spouse’s income as a “refund of premiums”. The surviving spouse can claim a deduction by transferring the benefit received in respect of the deceased spouse’s RRSP to the surviving spouse’s own RRSP or by purchasing an annuity that is subject to certain terms. Similar rules apply when a dependent child or grandchild of a deceased annuitant is the designated beneficiary under a RRSP.


As in all cases, when it comes to RRSPs and beneficiary designations, it is essential to plan properly. RRSP annuitants with spouses/common-law partners and/or financially dependent children or grandchildren should particularly consider the tax-deferral opportunities afforded to such individuals when managing their RRSPs and engaging in their estate planning.

Every case will invariably turn on its own facts. For example, if the surviving spouse of a deceased RRSP annuitant is in a low income tax bracket and/or has a need for cash, it may be beneficial to receive the payments outright (instead of transferring them to a RRSP and deferring taxes).

As the deadline for RRSP contributions is fast approaching (March 1, 2023), consider discussing the benefit of planning with RRSPs and/or how best to manage and deal with your RRSPs, including to ensure that your beneficiary designations are in line with your intentions, with your investment, tax and/or legal advisors.


[1]  There are some exceptions to the general rule that amounts withdrawn from a RRSP will be taxed at the time of withdrawal at the individual’s marginal tax rate. Some of these exceptions include the Home Buyer’s Plan and the Lifelong Learning Plan. These exceptions are outside the scope of this article, however, further details on the Home Buyer’s Plan may be found at: and on the Lifelong Learning Plan may be found at:

[2]  It is also worth noting that when the FMV of the RRSP declines after the individual dies but before the wind-up of the RRSP, a reduction to the amount that is generally included as taxable income may be permitted.

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1 Comment

  1. Leslie Stallard

    January 6, 2023 - 2:41 pm

    I believe a ‘matured’ RRSP is a RRIF; the year following the year in which the holder of the RRSP turns 71, they must begin withdrawing from the Retirement Savings Plan. At age 71 the RRSP must either be converted to a RRIF (Retirement Income Fund) or used to buy an annuity.

    It is important that holders/annuitants of these plans name a beneficiary with the institution when that is consistent with their estate planning. Especially with a RRIF, naming a spouse Successor Annuitant, instead of Beneficiary or leaving to their estate, may have tax advantages. A good idea would be to consult an accountant when doing estate planning. The rules around distribution of these plans can be confusing.

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