When an RRSP beneficiary faces a tax liability
First of all, my apologies for the break in my postings! In case some of you didn't know, Moose Jaw (and all of Saskatchewan) held a municipal election on 26 October and I was re-elected to City Council. I'm really happy to be back there and working with a new team of colleagues to help better Moose Jaw. I have to admit I've been sidetracked the last few weeks while participating in the campaign.
Now, I'm happy to be back with various topics to help with your investing and insurance focus. I just ran across this article on advisor.ca submitted by Jamie Golombek, who is the managing director, Tax & Estate Planning, CIBC Wealth Advisory Services. It touches on the sometimes tenuous position of appointing beneficiaries to an RRSP who is not your spouse or partner. Upon death, absent a qualified rollover to a surviving spouse or partner, the fair market value of an RRSP or RRIF is included in the deceased's estate as taxable income. It goes on to discuss what could happen if a beneficiary other than a spouse or partner is named on an RRSP and the owner of that RRSP passes away. Bottom line is that advice in all these areas of planning should be sought first, before assuming how something may play out.