How is an RRSP or RRIF taxed when the annuitant dies?
In 2026, an RRSP or RRIF is fully taxable at death: its fair market value just before death is income on the final return under ITA 146(8.8) or 146.3(6). The exceptions are amounts passing to a spouse or common law partner, or to a financially dependent child or grandchild whose 2025 net income was under $16,129 ($26,267 with an impairment).
Who receives the plan decides who pays the tax
An unmatured RRSP is deemed received at its fair market value immediately before death, and that amount goes on the final return from box 34 of the T4RSP canada.ca. A RRIF works the same way, from box 18 of the T4RIF
canada.ca. It's ordinary income, taxed in full. The law sits in ITA 146(8.8) for the RRSP
laws-lois.justice.gc.ca and 146.3(6) for the RRIF
laws-lois.justice.gc.ca.
| Who receives it | Unmatured RRSP | RRIF | What stays on the final return |
|---|---|---|---|
| Spouse or common law partner | Refund of premiums: transfer to their own RRSP (if 71 or younger at year end), RRIF or an eligible annuity | Successor annuitant, so the RRIF simply continues, or a designated benefit transferred to their own plan | Nothing, or the box 34 or box 18 amount reduced by what the spouse received |
| Financially dependent child or grandchild, dependent because of an impairment | Refund of premiums: transfer to an RRSP, RRIF, eligible annuity or their RDSP | Designated benefit, same transfers | Reduced by the amount paid to the child |
| Financially dependent child or grandchild, no impairment | Refund of premiums: only a term annuity running to age 18 | Designated benefit, same annuity only | Reduced by the amount paid to the child |
| Adult independent children, siblings, anyone else | Paid out, no deferral | Paid out, no deferral | Full fair market value |
| The estate | Full value, unless a qualifying survivor is an estate beneficiary and Form T2019 is filed | Full value, unless Form T1090 is filed | Full value minus any jointly designated amount |
The spouse and child routes come from the CRA's page on amounts paid at death canada.ca. The term annuity for a child without an impairment can run no more than 18 years minus the child's age when it's bought
canada.ca. Capital property follows different rules, covered on our deemed disposition on death page.
How is a $300,000 RRSP taxed when a son and a dependent grandchild split it?
Your client is widowed and dies in March 2026 with an unmatured RRSP worth $300,000. The plan names two beneficiaries equally: a son aged 34 who lives on his own, and a grandchild aged 10 who lived with your client and had no 2025 income. The plan pays out $300,000 in December 2026, with no change in value.
| Line | Amount |
|---|---|
| Fair market value at death, T4RSP box 34, final return line 12900 | $300,000 |
| Refund of premiums to the grandchild | $150,000 |
| Reduction the legal representative claims for the grandchild's share | minus $150,000 |
| RRSP income left on the final return (the son's half) | $150,000 |
| Grandchild's income from the refund of premiums | $150,000 |
| Grandchild's deduction for buying a term annuity, line 23200 | minus $150,000 |
| Longest annuity term allowed (18 minus 10) | 8 years |
The son's $150,000 stays taxed to your client, even though the son gets the cash. The grandchild's half moves off the final return because it is a refund of premiums paid to a financially dependent grandchild, and ITA 146(8.9) lets the legal representative deduct it laws-lois.justice.gc.ca. The reduction is worked out separately for each RRSP on Chart 2 of RC4177, and a letter explaining it goes with the final return
canada.ca.
Had the son been the only beneficiary, the full $300,000 would sit on the final return. Had the grandchild been dependent because of an impairment, the $150,000 could have gone to an RRSP, a RRIF or the grandchild's RDSP instead of a term annuity.
What happens when the value changes before the plan pays out?
Growth after death is the recipient's income, not your client's. If the RRSP above had paid out $320,000, the $20,000 increase would be taxed to the beneficiaries or the estate in the year they receive it, on a T4RSP issued for that amount canada.ca. For other beneficiaries and the estate, that income shows in box 28
canada.ca.
A drop works the other way. If total payments come in below the fair market value reported at death, the legal representative can deduct the difference on line 23200 of the final return. The deduction is the amount included at death, plus amounts included in the recipients' income after death, plus any tax paid amounts, minus everything paid out after death canada.ca. So a sole beneficiary plan worth $300,000 at death that pays out $270,000 gives a $30,000 deduction (ITA 146(8.92) for RRSPs, 146.3(6.3) for RRIFs).
Two conditions kill the deduction: the plan held an investment that wasn't qualified after death, or the final distribution happened after the end of the year following the year of death, although the CRA can waive the timing case by case canada.ca. For a death in 2026, final distribution generally has to happen by December 31, 2027. When the final payout lands in a later year than the death, the legal representative asks the CRA to reassess the final return.
The plan carrier reports the decline on Form RC249, which it issues to the executor for the year of the final distribution canada.ca. The same form covers a RRIF and an unmatured RRSP
canada.ca.
Which forms and slips move the income, and who gets each?
| Document | Issued to or filed by | What it does |
|---|---|---|
| T4RSP box 34 | The deceased, for the year of death | Fair market value of an unmatured RRSP at death |
| T4RSP box 18 | The spouse or common law partner | Amount paid to the spouse; all of it when the whole plan goes directly to them |
| T4RSP box 28 | Other beneficiaries or the estate | Income paid to them, including growth after death |
| T4RIF box 18 | The deceased, for the year of death | Fair market value of the RRIF at death |
| T4RIF box 16 | The spouse or common law partner | Amount paid to the spouse as beneficiary |
| T4RIF box 22 | Other beneficiaries or the estate | Amount paid to them |
| Form T2019 | Legal representative and qualifying survivor, jointly | Treats RRSP money paid to the estate as a refund of premiums to the survivor |
| Form T1090 | Legal representative and qualifying survivor, jointly | Treats RRIF money paid to the estate as a designated benefit to the survivor |
| Form RC249 | Plan carrier to the executor | Reports a post death decline in value |
The RRSP boxes come from RC4177 canada.ca and the RRIF boxes from RC4178
canada.ca. When the whole RRSP goes to the spouse and is transferred directly to their plan, no T4RSP is issued in the deceased's name at all, and only the spouse gets a slip
canada.ca.
T2019 is the RRSP form canada.ca and T1090 the RRIF one
canada.ca. Both fix a common planning gap: the plan names the estate, but the spouse or dependent child inherits under the will. The joint designation in ITA 146(8.1) treats the amount as received by that survivor, up to what the estate actually pays them
laws-lois.justice.gc.ca.
The survivor then has to move the money. A transfer or annuity purchase has to be completed in the year the refund of premiums is received or within 60 days after that year ends; a survivor who is 71 that year must finish an RRSP transfer by December 31 canada.ca. An RRSP transfer is deducted on line 20800 through Schedule 7, and a transfer to a RRIF or annuity on line 23200
canada.ca.
Who counts as a financially dependent child or grandchild?
The child or grandchild has to have ordinarily lived with and depended on your client before death, and their net income (line 23600) for the year before death has to be below the unreduced basic personal amount. If they were dependent because of a mental or physical impairment, the limit is the basic personal amount plus the disability amount canada.ca. A child away at school still counts as living with the parent.
| Year of death | Income year tested | Limit, no impairment | Limit, impairment |
|---|---|---|---|
| 2026 | 2025 | Below $16,129 | Up to $26,267 ($16,129 plus $10,138) |
| 2027 | 2026 | Below $16,452 | Up to $26,793 ($16,452 plus $10,341) |
The amounts are the CRA's indexed figures for 2025 and 2026 canada.ca. In the Act, ITA 146(1.1) presumes a child above the limit was not dependent
laws-lois.justice.gc.ca, and the CRA says it can still accept dependence in other cases on a written request
canada.ca. An adult child with a modest job is usually over the line, so their share stays on the final return.
The beneficiary can be liable for the estate's tax on the plan
A named beneficiary collects the RRSP or RRIF outside the estate, but the tax on it lands on the final return. If the estate can't pay, ITA 160.2 makes the beneficiary jointly liable with the deceased for the extra tax the plan created, in proportion to the share of the plan they received laws-lois.justice.gc.ca.
This matters when the RRSP goes to one child and the rest of the estate to another. The estate pays the tax on money it never received. Run the numbers before distributing, and get an estate clearance certificate before the executor pays out the residue.
Sources
Can the legal representative still make an RRSP contribution for the deceased?
Not to the deceased's own plan, but they can contribute to the surviving spouse's or common law partner's RRSP in the year of death or within 60 days after it, and claim it on the final return canada.ca. The deduction is capped at the deceased's RRSP deduction limit for that year
canada.ca.
The RRIF names no successor annuitant. Can the spouse still take it over?
What if the surviving spouse is over 71?
They can't transfer into an RRSP, but they can still move the refund of premiums into their own RRIF or buy an eligible annuity, and deduct it on line 23200 canada.ca. The year plus 60 days deadline still applies.
How is a matured RRSP handled?
Annuity payments received from January 1 to the date of death go on line 12900 of the final return. A spouse named as beneficiary just keeps receiving the payments as their own income, and if the estate is the beneficiary, the spouse and legal representative can jointly elect in writing to treat the spouse as the annuitant canada.ca. For any other beneficiary, the box 34 amount goes on the deceased's line 12900.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.