Transferring RRIF Assets
Because a Registered Retirement Income Fund (RRIF) is an income tax deferred structure that is governed by a formal trust arrangement, strict rules must be followed when moving assets between, into, and out of RRIF accounts. By following these strict rules, individuals will ensure that the RRIF assets remain sheltered from inclusion in the annuitant’s income for income tax purposes when they are transferred between accounts.
There are three types of categories for transferring RRIF assets between accounts as listed below, each of which is discussed in the following section:
- Transfer of assets between RRIFs
- Transfer of assets from an RRIF into a non-RRIF account type
- Transfer of assets from non-RRIF account types into an RRIF
Transfer of assets between RRIFs
A transfer of RRIF assets from one RRIF account to another RRIF account is the most common type of transfer and is accomplished by visiting the receiving financial institution and completing the Canada Revenue Agency’s (CRA) Form T2033 – Direct Transfer Under Subsection 146.3(14.1) or Paragraph 146(16)(a) or 146.3(2)e. By completing and signing this form you are giving the receiving financial institution instructions to transfer RRIF assets held at another financial institution.
When completing the transfer form you will need to supply information about the transferring financial institution (name, address, RRIF Plan number), your name, address, social insurance number, and the type of transfer (RRIF to RRIF), the amount to be transferred (a specific dollar amount or “All” of the account’s assets) and whether you want the transfer to be made in the form of Cash, In kind, or any combination of the two. A Cash transfer will instruct the transferring institution to sell all of the account’s assets and send the cash proceeds. An In kind transfer will instruct the transferring institution to transfer the assets as they are, where nothing is to be sold.
The CRA requires that the transfer of RRIF assets occurs directly between financial institutions so the RRIF assets remain sheltered from income tax, and the T2030 - Direct Transfer form makes this possible.
When transferring assets you should understand that the RRIF type at the transferring and receiving financial institutions is an important consideration for the transfer to be successful, namely:
- If the type of RRIF at the receiving financial institution is identical to the RRIF type at the transferring financial institution then the transfer should be successful. For example, transferring an Individual RRIF into an Individual RRIF is fine. But you will not be able to transfer a RRIF that originated from a Spousal RRSP into an Individual RRIF. Even though transferring an Individual RRIF into an RRIF that originated from a Spousal RRSP is possible, with the resulting combined RRIF designated as a Spousal RRIF.
- Transferring a Self-Directed RRIF into a Regular RRIF is not possible because the assets held in a Self-Directed RRIF may not be compatible with investment restrictions for a Regular RRIF. But transferring assets held in a Regular RRIF to a Self-Directed RRIF may be possible.
- Before attempting to transfer RRIF assets check with the receiving financial institution to ensure they can accept and administer the transferred assets. For example, mortgages, mortgage investment corporations and some mutual funds may not be acceptable to the receiving institution. In addition, some RRIF investments are considered to be proprietary to the transferring financial institution and, thus, non-transferable.
Note: Typically, when transferring RRIF assets you will incur transfer fees and possibly investment sales or redemption fees, so you should ask about these before you complete the transfer form.
It is important to understand that if you are transferring all of your RRIF account assets, the transferring financial institution is required by the CRA to withdraw and pay you your Annual Minimum Payment before transferring your RRIF account. For example, if your Annual Minimum Payment is $10,000.00 and you have only withdrawn $1,000.00 before your financial institution transfers your RRIF account, they will withdraw and pay you the remaining $9,000.00 before the transfer can begin.
Under special circumstances such as relationship breakdown (e.g. separation or divorce, and the death of the plan’s annuitant), the CRA does permit otherwise restricted transfers to be completed. (For additional details on these special circumstances, see our section Death, Divorce, and Bankruptcy.)
Transfer of assets from an RRIF into a non-RRIF account type
Transferring RRIF assets into a Registered Retirement Savings Plan (RRSP) is the most common of these types of transfers. If you are 71 years of age or younger you can transfer a portion or all of your RRIF assets into an RRSP. The RRSP and RRIF must be the same type. So, for example, if your RRIF originated from a Spousal RRSP, then your RRIF can be transferred back into a Spousal RRSP, but it cannot be transferred into an Individual RRSP.
The ability to transfer RRIF assets back into an RRSP account is the main reason that your RRIF retains its Spousal designation, if it originates from a Spousal RRSP.
Example: You might have transferred a portion of your RRSP into an RRIF account in order to receive RRIF payments that would qualify for the $2,000.00 Pension Income Tax Credit for the period prior to receiving your company pension. Now that you are receiving the company pension, you no longer need to withdraw monies from your registered savings and, therefore, you decide to transfer your RRIF back into an RRSP.
Or maybe, when you retired you needed to use your registered savings to support your retirement, but you have just received an inheritance and no longer need to withdraw monies from your registered savings. Therefore, you decide to transfer your RRIF back into an RRSP.
Note: Typically, when transferring RRSP assets you will incur transfer fees and possibly investment sales or redemption fees, so you should ask about these before you complete the transfer form.
Transfer of assets from non-RRIF account types into an RRIF
There are a number of possible direct transfers from non-RRIF account types into an RRIF plan. For example, some direct transfers include the following:
- Transfers from a Registered Retirement Savings Plan (RRSP): Transfers of assets from an RRIF into an RRSP are possible provided you are 71 years of age or younger. To transfer your RRIF back into an RRSP you would obtain and complete a T2030 Direct Transfer form from the receiving financial institution.
- Transfers from a deceased annuitant’s RRSP: Transfers from a deceased annuitant’s RRSP directly to a surviving spouse’s RRIF can be facilitated completing a beneficiary designation in the account’s documentation. By completing the beneficiary designation you can direct that a portion or all of the RRIF assets be transferred directly into the surviving spouse’s RRSP or RRIF account. Upon the death of an annuitant, the normal restrictions on transferring Spousal RRIF’s into an Individual RRIF are relaxed.
- Transfers from a Registered Pension Plan (RPP): Transfers from a RPP into an RRIF are possible upon marriage or common-law relationship breakdown, death or termination of employment. Your employer’s human resources or payroll department will provide you with the plan’s information and the necessary documents to initiate the transfer.
Transfers from a Registered Pension Plan to a RRIF may be possible for both defined benefit plans and money purchase plans. Where an employee terminates their employment, it may be possible to transfer the payment of lump sums, in full or partial satisfaction of the employee’s rights under the pension plan.