Mar
20
2020
By Keith Wong
Hello;
Here is a scenario:
- Gerald has a RRIF worth $180,000
- Doreen is Gerald's wife
- Gerald's RRIF minimum for this year is $7,800 - We set a payment schedule that gives him $900/mth on the 1st day of every month.
Gerald passes away on 30-March. What happens?
- The proceeds of the RRIF can generally be paid to the wife, as beneficary, as a "designated benefit" available to be rolled, tax-free to an RRSP, RRIF, or registered annuity.
- The income received by Gerald to his date of death (30-Mar) $900 x 3 = $2,700 will be taxed in Gerald's hands on his terminal tax return. The balance of the RRIF proceeds, less the unaccounted for balance of the RRIF minimum, are treated as a designated benefit, available for the rollover. The RRIF minimum for the year was $7,800, $2,700 of which was taxed in Gerald's hands. The balance of the RRIF minimum of $5,100 ($7,800 - $2,700) will have to be taxed in the hands of the recipient (Doreen), leaving $174,900 of the RRIF proceeds ($180,000 - $5,100 = $174,900) available for the rollover.
Sincerely, Mike Busby
