RRSP’s When You are 69
You must remove the funds from your RRSP by the end of the
year in which you turn 69. A straight withdrawal is usually
not the best option, since the money will be taxed like any
other income. You should instead consider transferring the
RRSP funds to a Registered Retirement Income Fund (RRIF),
or an annuity.
Even though you cannot put money into your own RRSP after
the year you turn 69, you can still contribute to a spousal
RRSP until the end of the year your spouse becomes 69. However,
to do so, you will have to have unused RRSP deduction room,
or have current earned income. By the end of the year that
your spouse turns 69, he or she will also have to move the
funds from his or her RRSP.
If you are 69 this year, see your RRSP issuer or a Chartered
Accountant for advice.
The Institute of Chartered Accountants of Alberta provides
information for RRSP Tips as a public service.
Estate Planning Regarding RRSP’s/RRIF’s
By specifically naming beneficiaries on your RRSP/RRIF contracts,
the RRSP’s/RRIF’s do not form part of your estate.
This avoids probate (not a significant issue in Alberta),
possible legal or executor fees, and a time delay in the transfer
of the RRSP’s/RRIF’s to your beneficiaries. It
also prevents any creditors from taking action against the
RRSP’s/RRIF’s after your death. You can change
the beneficiaries on your RRSP’s/RRIF’s at any
time.
You must be careful with this planning, as the tax due on
the maturing RRSP/RRIF will be owed by the estate, which may
unintentionally transfer all the tax burden to another beneficiary.
If the beneficiary of your RRSP is your spouse or a financially
dependent child or grandchild, there are opportunities for
continuing tax deferment beyond your death. The child or grandchild
must be financially dependent on you at the time of your death,
and either under 18 or physically or mentally infirm. This
tax deferment is available to the financially dependent child
or grandchild even if there is a surviving spouse.
The Institute of Chartered Accountants of Alberta provides
information for RRSP Tips as a public service.
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