Amounts received from a RRIF upon the death of an annuitant can be transferred directly or indirectly to your RRSP, to your RRIF, or to buy yourself an eligible annuity if you were a qualified beneficiary of the deceased annuitant.
You can now rollover the proceeds of a deceased annuitant's RRIF to the registered disability savings plan (RDSP) of a financially dependent infirm child or grandchild. 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.
Note: If you were financially dependent, but not because of a mental or physical impairment, the funds can only be transferred to a term annuity.
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 fair market value (FMV) of 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 after 2008, the deceased's legal representative can ask that the amount of the decrease be carried back and deducted on the deceased's final return through a reassessment. However, if the final distribution is made in the year of death, the deduction will be claimed when filing the final return.
The amount of the deduction is the total of:
This applies where the final payment from the RRIF occurs after 2008.
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 taxpayers on a case-by-case basis.