What Happens to Your RRSP When You Die? Tax, Rollovers, Beneficiary vs Estate (Canada)

When an RRSP holder dies, the plan doesn’t simply pass to the family untouched. Unless it goes to a spouse or a financially dependent child, the whole balance is added to income on the final tax return. This page explains how that works, who can defer the tax, how the spousal rollover is done, and what the bill looks like when no rollover applies. Naming a beneficiary and leaving the plan to the estate are compared further down; if the plan had already become a RRIF, the successor annuitant option is in what happens to a RRIF when you die. Every other RRSP and RRIF topic is in the RRSP and RRIF guide directory.

The core rule: the RRSP is treated as cashed out at death

CRA treats the holder as having received the fair market value of everything in the RRSP immediately before death. That amount goes on the deceased’s final (terminal) T1 return, which covers January 1 to the date of death.

How big the tax bill can be

Because the whole balance lands in one year, most of a large RRSP ends up taxed in the upper brackets. For an Ontario resident with no other income in the year of death, the income tax on the RRSP alone is roughly:

Estimated with 2026 federal and Ontario tax rules, including the basic personal amount, Ontario surtax and Health Premium, and treating the balance as non-employment income (no CPP, EI or employment credits). Other income in the year of death, and the province, change the result. Your own figures can be run through the marginal tax rate calculator.

Who receives the RRSP, and how it is taxed

• A spouse or common-law partner can transfer it to their own RRSP, RRIF or an annuity.
• For a transfer to their RRSP, the survivor must be 71 or younger at the end of the year of the transfer.
• A financially dependent child or grandchild dependent because of an impairment can transfer it to their RRSP, RRIF, RDSP or an annuity.
• Another financially dependent child or grandchild can only buy an annuity running to age 18.
• Financially dependent means living with and depending on the annuitant, with net income last year under the basic personal amount (higher limit with an impairment).

A child or grandchild generally counts as financially dependent if their net income for the previous year was below the basic personal amount for that year (the basic personal amount plus the disability amount for a child with an impairment).

The spousal rollover, step by step

The transfer does not use the survivor’s own RRSP contribution room. A survivor past the age-71 conversion deadline transfers to a RRIF or annuity rather than an RRSP.

If the estate was named instead

If the RRSP is paid to the estate but the spouse or a dependent child is a beneficiary of the estate, the executor and the survivor can jointly file Form T2019 to designate all or part of the payment as a refund of premiums to that survivor. The deferral is then available, but the money has gone through the estate and probate first.

Several beneficiaries

A designation can be split. Only the portion going to a qualifying survivor can be deferred; a portion left to an adult child is taxed on the final return.

RRSP vs RRIF at death

A RRIF follows the same basic rule, with one extra option: the spouse can be named successor annuitant, so the RRIF simply continues in the survivor’s name without being collapsed. The RRIF-specific steps and forms are covered in what happens to a RRIF when you die, and the choice between the two designations in RRIF successor annuitant vs beneficiary.

RRSP beneficiary vs estate

When the RRSP goes to anyone other than a spouse or a financially dependent child, naming them as beneficiary doesn’t change the income tax: the full value is on the final return either way. What the designation changes is the route the money takes.

In Ontario, estate administration tax is 1.5% of the estate value above $50,000, and an RRSP, RRIF or TFSA with a beneficiary designation is left out of that value. Quebec handles beneficiary designations and estate settlement differently: institutions such as RBC Direct Investing don’t accept a plan designation from Quebec residents, so the beneficiary is named in the will, and a notarial will does not need to be probated.

When the will and the designation disagree

In Ontario, the designation on file with the institution usually decides who receives the plan unless a later designation replaces it. A will revokes or replaces a designation only if it refers to the designation or the plan expressly (Succession Law Reform Act, ss. 51(2) and 52(1)). A general clause revoking earlier wills, or a will that leaves everything to one person, leaves an older designation in place, so the plan can still go to someone named years ago, such as a former spouse.

What the executor handles

The executor gets the date-of-death value from the institution, reports the RRSP on the final return (or confirms the survivor’s rollover), files any T2019 joint designation, pays the tax, and usually obtains a CRA clearance certificate before distributing the estate; without one, the executor can be personally liable for unpaid tax up to the value distributed.

Reducing the tax before death

• Name the spouse directly and keep the designation current with each institution.
• Draw the RRSP down in lower-income years so less is taxed at once at death; see the RRSP meltdown strategy.
• Convert to a RRIF and take withdrawals over retirement; the RRIF minimum withdrawal table shows how the required rate rises with age.
• Leave part to charity. In the year of death, donations can be claimed up to 100% of net income, and any excess can be claimed on the return for the previous year (also up to 100% of that year’s net income). Naming a charity as RRSP beneficiary counts as a donation.
• Life insurance sized to the expected tax bill lets heirs keep more of the RRSP. A joint last-to-die policy is often used, since the tax usually arrives when the second spouse dies. See life insurance in estate planning.

Common mistakes

TFSA at death, for comparison

Related resources

• RRSP withdrawal rules
• Estate planning guides
• Beneficiary designations in Canada
• CPP survivor benefits
• RRIF withdrawal rules