What happens to an RRSP when the account holder dies in Canada?

When an RRSP holder dies, the entire RRSP balance is included in their income for the year of death (called a deemed disposition). This triggers income tax on the full amount at the deceased's marginal tax rate. However, if a spouse or common-law partner is named as beneficiary, the RRSP can be transferred directly to their RRSP or RRIF with no immediate tax — deferring tax until the surviving spouse withdraws the funds.

Should I name my spouse or my estate as RRSP beneficiary?

Always name your spouse or common-law partner as RRSP beneficiary (not the estate) to enable a tax-free spousal rollover. If the estate is the beneficiary, the RRSP is included in the deceased's terminal return immediately, incurring full income tax. A direct spousal beneficiary avoids this and keeps the assets inside the registered account. If no spouse exists, naming adult children is better than the estate for faster distribution, though no tax deferral is available.

How does a spousal RRSP rollover work at death?

When a spouse is named as RRSP beneficiary, they have the option to transfer the RRSP proceeds directly into their own RRSP or RRIF through a tax-deferred rollover. The deceased's estate does not include the RRSP in income. The surviving spouse completes CRA Form T2220 and the funds are transferred. Tax is deferred until the surviving spouse withdraws from their RRSP or RRIF.

What is a refund of premiums from an RRSP at death?

A "refund of premiums" is the technical term for RRSP proceeds paid to an eligible beneficiary (spouse, common-law partner, financially dependent child or grandchild). A spouse who receives the refund of premiums can roll it into their own RRSP/RRIF tax-free. A financially dependent child or grandchild can roll the funds into an annuity or RDSP (if disabled). Other beneficiaries receive cash and the amount is taxed on the deceased's final return.

Does an RRSP go through probate in Canada?

If you name a beneficiary directly on the RRSP (not the estate), the RRSP generally bypasses probate entirely. The funds pass directly to the named beneficiary without going through the estate and without court approval. This saves probate fees (up to 1.5% in Ontario on assets over $50,000) and speeds up distribution. Naming the estate as beneficiary means RRSP proceeds go through probate.

What happens if there is no RRSP beneficiary named?

If no beneficiary is named on the RRSP, the account proceeds go to the deceased's estate. The full RRSP value is included in the deceased's income for the year of death, and income tax is paid from the estate. The remaining proceeds are then distributed according to the will (or intestacy laws if no will exists). No tax-deferred rollover is possible when the estate is the recipient.

What Happens to Your RRSP When You Die? (Canada 2026)

Your RRSP doesn’t automatically pass to your loved ones tax-free when you die — without proper planning, the full balance could be taxed at your highest marginal rate in your year of death. Understanding how beneficiary designations, spousal rollovers, and estate treatment work can save your family tens of thousands of dollars. Here’s everything you need to know about what happens to your RRSP at death in Canada.

The Core Rule: Deemed Disposition at Death

When an RRSP holder dies, CRA treats the entire RRSP as if it was deregistered (collapsed) on the date of death.

Rule	Details
Deemed disposition	Full RRSP value included in final return
Tax rate	Highest marginal rate in year of death
Exception	Qualifying beneficiary (spouse, dependent) allows rollover

Tax Impact Without Planning

RRSP Value	Provincial Tax Rate + Federal	Potential Tax
$200,000	~48% (Ontario top combined)	~$96,000
$400,000	~50%	~$200,000
$600,000	~53%	~$318,000

These are the taxes owed by the estate if no spousal rollover applies.

Beneficiary Types and Outcomes

Option 1: Spouse or Common-Law Partner as Beneficiary

Outcome	Details
Tax	Deferred — not taxed until spouse withdraws
Process	Spouse completes T2220, transfers to own RRSP/RRIF
RRSP contribution room	Not needed — rollover is tax-deferred, not a contribution
Age limit	Surviving spouse must have room or convert to RRIF
Estate	RRSP bypasses estate entirely

This is the best outcome for most couples.

Option 2: Financially Dependent Child or Grandchild

Dependent Type	Rollover Option	Tax Treatment
Minor child	Fixed-term annuity to age 18	Taxed as received
Financial dependent (any age)	Fixed-term annuity	Taxed as received
Financially dependent due to disability	RDSP rollover	Tax-deferred via RDSP

A child/grandchild must be “financially dependent” on the deceased — meaning their income was below the basic personal amount or they had a dependency due to mental/physical infirmity.

Option 3: Adult Child (Not Financially Dependent)

Outcome	Details
Rollover	Not available
Tax	Full amount taxed on deceased’s terminal return
Child receives	After-tax proceeds from estate

Adult children who are not financially dependent cannot roll over the RRSP. The tax hits the estate.

Option 4: Estate as Beneficiary

Outcome	Details
Tax	Full RRSP taxed on terminal return
Probate	RRSP included in probate
Distribution	Per will or intestacy
Benefit	None — this is the worst outcome

Never name “my estate” as your RRSP beneficiary.

Spousal Rollover: Step by Step

What Qualifies

Qualifier	Details
Who	Legal spouse or common-law partner
How long together	At time of death
Marital status	Doesn’t matter if separated but not divorced

How the Rollover Works

Step	Action
1	RRSP holder dies with spouse named as beneficiary
2	Financial institution contacts spouse
3	Spouse elects to transfer into their own RRSP or RRIF
4	Spouse completes CRA Form T2220
5	Funds transfer directly — no tax at transfer
6	Deceased’s terminal return does NOT include the RRSP
7	Surviving spouse pays tax when they eventually withdraw

What the Surviving Spouse Can Do With Funds

Option	When Available
Transfer to own RRSP	Before age 71
Transfer to RRIF	Any age
Take as cash (taxed)	Any time
Transfer to qualifying annuity	Any time

RRSP vs RRIF at Death

RRIF Rules at Death

RRIF accounts (converted from RRSP after 71) follow the same spousal rollover rules.

Feature	RRSP at Death	RRIF at Death
Spousal rollover	Yes	Yes
Child/grandchild rollover	Yes (financial dependent)	Yes
Deemed disposition	Yes (if no rollover)	Yes (if no rollover)
Minimum withdrawal year of death	Must be paid out	Minimum paid; rest rolls over

Probate Implications

Beneficiary	Goes Through Probate?
Named spouse/partner	No
Named child/adult	No
Estate	Yes

Probate Fee Savings — Ontario Example

Asset	Probate Fee
RRSP via estate	1.5% of value over $50,000
RRSP via named beneficiary	$0 (bypasses probate)
Savings on $400,000 RRSP	~$5,250

Plus months of estate administration time saved.

Terminal Return: What Gets Included

The deceased’s final (“terminal”) T1 return covers January 1 to date of death.

Included in Terminal Return	If No Rollover
All income earned to date of death	✅
RRSP deemed disposition	✅ (if no spousal/dependent rollover)
Capital gains	✅ (deemed disposition of other assets)
Employment income, CPP, EI	✅

The RRSP gross-up hits the terminal return at the full marginal rate — on top of all other income in the year, with no spreading across years.

Calculating the Tax Hit — No Spousal Rollover

Example: Ontario Resident, Dies With $350,000 RRSP

Income Item	Amount
Salary (Jan–Aug)	$45,000
CPP/OAS (partial year)	$12,000
RRSP deemed disposition	$350,000
Total income	$407,000

Marginal Tax Rate	Combined Federal + Ontario
On $407,000	~52.5%
Tax on RRSP portion	~$183,750
After-tax to estate	~$166,250

The estate keeps less than half of a $350,000 RRSP.

Strategies to Minimize RRSP Tax at Death

1. Name Your Spouse as Beneficiary (Most Important)

Full rollover, no immediate tax
Ensure beneficiary designation is current and on file with the financial institution

2. RRSP Meltdown in Retirement

Strategy	Details
What	Systematically withdraw RRSP in lower-income years
When	After retirement, before RRIF conversion
Effect	Reduces balance and tax burden
Trade-off	Pays tax now vs. larger tax at death

See RRSP Meltdown Strategy for the math.

3. Convert to RRIF and Draw Down

Minimum RRIF withdrawals reduce the balance over time.

Age	Minimum RRIF %
72	5.40%
75	5.82%
80	6.82%
85	8.51%
90	11.92%
95+	20.00%

The higher the draw, the less taxed at death.

4. RRSP to RRIF: Spousal Continuing Benefits

If surviving spouse is named on a RRIF, they can continue the RRIF account with no tax disruption.

5. Charitable Bequests

Naming a registered charity as RRSP/RRIF beneficiary:

Feature	Details
Tax donation credit	Offsets terminal return income
Can offset	Up to 100% of net income in year of death + 1 year prior
Effect	Charity receives RRSP proceeds; donated amount creates donation credit

6. Life Insurance to Cover Tax

Strategy	Details
Purpose	Fund the tax bill on RRSP at death
Who	Second-to-die policy (survives first spouse’s spousal rollover)
Coverage	Approximate RRSP tax liability
Benefit	Heirs keep full RRSP value after insurance pays tax

Multiple Beneficiaries

Scenario	Treatment
Spouse + adult child as beneficiaries	Spouse’s portion rolls over; child’s portion taxed on terminal return
Two adult children	Full value taxed on terminal return
Spouse 100%	Full rollover

You can split the designation — but only the spouse’s portion rolls over tax-free.

Quebec Differences

Feature	Quebec
Spousal rollover	Available (same rules)
Probate	Quebec has no probate — different system for asset transfer
Beneficiary designation	Must be named directly on the contract

Common Mistakes to Avoid

Mistake	Consequence
Naming the estate	RRSP taxed immediately at highest rate
Outdated beneficiary (ex-spouse)	Ex-spouse may receive funds despite divorce
No beneficiary named	Default to estate — taxed + probated
Naming minor child directly	Needs court-appointed trustee
Forgetting RRIF has separate beneficiary	RRIF beneficiary is different from RRSP

Checklist: What to Do Now

Action	Why
Name spouse as RRSP beneficiary	Tax-free rollover
Name spouse as RRIF beneficiary	Continuation of RRIF
Review all accounts simultaneously	TFSA, RRSP, RRIF all separate
Confirm with financial institution	Beneficiary on file, not just in will
Consider RRSP meltdown strategy	Reduce terminal tax over time
Review after life changes	Divorce, death of beneficiary, new spouse

Note: Your will does not automatically override RRSP beneficiary designations. Financial institution contracts control RRSP beneficiary.

TFSA at Death — For Comparison

Feature	RRSP at Death	TFSA at Death
Deemed disposition	Yes — taxable	No — TFSA to spouse tax-free (Successor Holder)
Spousal rollover	Deferred (taxed later)	Tax-free (never taxed)
Growth after death	Taxed	Tax-free (if Successor Holder)

Why TFSA leads in estate planning: TFSA gets a tax-free transfer with a Successor Holder designation; RRSP only defers the tax.

RRSP Withdrawal Rules — When and how to withdraw
RRSP Meltdown Strategy — Reduce the terminal tax hit
RRSP and RRIF Estate Planning Checklist — Full checklist
Estate Planning Guide Canada — Wills, POA, and estates
CPP Survivor Benefits — What your spouse receives from CPP
RRIF Withdrawal Rules — Managing RRIF in retirement