# Please help, expert needed, RRSP rollover question.



## Taxhelpneeded (Apr 6, 2016)

Thank you for taking the time to help, I am really confused and pulling my hair out over this, I will try to keep it simple.



Mother passed away DEC 2014, she had 2 RRSP plans, one with Royal bank and one with Scotia bank.

Royal bank plan was straight forward, my dad was named the sole beneficiary, they transferred over everything into his RRSP in January 2015, issued him a slip, and he just got a slip with the refund of premiums in box 18, both slips dated 2015. The amounts will be reported on his 2015 return and should cancel each other out resulting in no taxes owed, so far so good.



Scotia bank is the issue, he wasn't named as the beneficiary in the plan with the bank (no one was), they said the estate would be the beneficiary. 

My father was named the sole executor and beneficiary of all assets including RRSP (it specifically stated RRSP in the will)in my mothers will, so he had access to these funds. About $20,000 he used to pay her debts/bills and the rest of the RRSP he transferred into his own new RRSP plan with scotia bank. This was done in NOV 2015 and they issued him a RRSP contribution slip. 

A final return was filed for my Mother on time in 2015 (the RRSP amounts were NOT included on her return). 


Ok so now what? I'm sitting here with a T4RRSP statement from scotia bank in my mothers name, with the full amount of the RRSPs in box 34 "Amount deemed received at death".

In my research I've found a form T2019.


This form seems to allow you to make the situation as it would be had my father been declared the beneficiary with the bank. I mean essentially that's all I want to do, make it so the RRSP's were transferred to him and pay tax (on his return) for the $20,000 that he used.


It's all very confusing.


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## Taxhelpneeded (Apr 6, 2016)

I just wanted to add that even though the T4RSP in my mothers name just came in the mail this March but is dated for the year 2014 (she passed DEC 2014).


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## carverman (Nov 8, 2010)

Taxhelpneeded said:


> I just wanted to add that even though the T4RSP in my mothers name just came in the mail this March but is dated for the year 2014 (she passed DEC 2014).


not quite sure what you are asking. if your mother and father were still married at time of her death, there is no "mother's estate", any assets are just passed to the surviving marriage partner which happens to be your father, also named executor.
iMaybe the bank just needs a form or letter to name the father as the defacto beneficiary clarify this. and PROBABLY
(not sure but others may be able to answer this one), have the father open an rrsp for a direct transfer from mother
without cashing in the RRSP and having to pay taxes on it. 



> On death, the RRSPs are deemed to have collapsed. *The tax consequences really depend on who is listed as the beneficiary of the RRSP.* The general rule for an RRSP or RRIF is that the value of the RRSP or RRIF at the date of death is included in the income of the deceased for the tax return for the year of death
> 
> There are *three exceptions to this rule where the tax can be deferred if the beneficiary of the RRSP,* RRIF, or estate is one of three parties:
> 
> ...


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## OptsyEagle (Nov 29, 2009)

Taxhelpneeded said:


> My father was named the sole executor and beneficiary of all assets including RRSP (it specifically stated RRSP in the will)in my mothers will, so he had access to these funds. About $20,000 he used to pay her debts/bills and the rest of the RRSP he transferred into his own new RRSP plan with scotia bank. This was done in NOV 2015 and they issued him a RRSP contribution slip.
> 
> A final return was filed for my Mother on time in 2015 (the RRSP amounts were NOT included on her return).
> 
> ...


Was this form T2019 provided to Scotiabank before they issued the money to your mother's estate? They had to have been provided something. It seems to me that your father took receipt of these RRSP proceeds. Actually spent some of it on her debts and then used the remainder to make a tax deductible contribution to his own RRSP. That sounds like he decided to cash it out, in your mother's name, and take the "after tax proceeds". The T4RRSP is just to provide the accounting to get the taxes owed correct. If I was Scotiabank, I would have issued the T4RRSP as well. 

Maybe I am missing something here.


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## carverman (Nov 8, 2010)

OptsyEagle said:


> Was this form T2019 provided to Scotiabank before they issued the money to your mother's estate? They had to have been provided something. It seems to me that your father took receipt of these RRSP proceeds. Actually spent some of it on her debts and then used the remainder to make a tax deductible contribution to his own RRSP. That sounds like he decided to cash it out, in your mother's name, and take the "after tax proceeds". The T4RRSP is just to provide the accounting to get the taxes owed correct. If I was Scotiabank, I would have issued the T4RRSP as well.
> 
> Maybe I am missing something here.


If the mother opened the RRSP , Scotia bank SHOULD have named a beneficiary. That was stupid on their part. If it was me and all the RRSP needed was a legal form to designate a benefciary after the fact, a trip to a notary public and notarizing the form should suffice..provide of course, the RRSP money is still sitting there untouched. 



> If the Estate is named as the beneficiary, the entire RRSP is taxable to the deceased in the year-of-death tax return.
> *However, a spouse or common-law spouse can elect, jointly with the executor of the estate, to transfer all or part of the RRSP to him or her.*
> Any amount of this transfer NOT contributed to the spouse’s RRSP is taxable to the spouse.
> 
> *The whole amount transferred to the spouse is deductible from the deceased’s income,* but any amount not transferred is taxable to the deceased.


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## carverman (Nov 8, 2010)

here is the link on the info I mentioned above..if it were me..I'd be going after Scotia bank for their error of omission putting down a benificiary...
where are the banks finding these people to do legal forms without having the sense to dot the "i's and cross the "t's"--high school dropouts?
http://www.nilsonco.com/insight-past/rrsp_beneficiaries/


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## OptsyEagle (Nov 29, 2009)

Well, we really don't know who omitted to name the beneficiary, when the account was opened. You can be sure that if any court in the past decided that it was the bank's responsibility to ensure the client understood all the tax consequences of a beneficiary election, they would have made the mother initial the election of the estate for a beneficiary.

There are many RRSPs out there where the owner has elected to not name a beneficiary, even when there is a spouse. We can argue back and forth whether the bank should have pointed out the tax consequences of having the estate the beneficiary, but at the end of the day, the discussion will not help the OP avoid the taxation on this particular situation.

Basically the executor asked Scotiabank to pay the proceeds to the estate and issue a T4RRSP afterwards and it sounds like that is exactly what they did. I agree, it now sounds like the executor may not have known that was what they were asking for, but if that is the case, we now know who made the mistake.

Now, all that being said, I am not familiar with the form he mentioned so perhaps this is a situation that can be rectified with the government, not the bank. He said the father contributed some of the money to the RRSP. Perhaps he might be able to do a tax amendment to at least get that money rolled into his RRSP, without the T4RRSP. Even if he can do that, he would need to be aware of the fact that any money that did not go into his fathers RRSP, would definitely be taxable in his mothers estate...and if his father received a reduction in his taxes for that contribution, in 2015 on his taxes owed, that refund would all get clawed back as well. Depending on the difference in tax brackets, there may not be that much tax money saved. He would have to first find out if it can be done and then do the calculation to see if it is worth the effort.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> If the mother opened the RRSP , Scotia bank SHOULD have named a beneficiary.
> That was stupid on their part...


That is not my understanding.

Scotia has to identify that a beneficiary can be named on the form but where the individual does not fill it in or asks to register one later, I do not believe there is a legal requirement to have one filled out.

If the RRSP couldn't be opened without naming one then there should be no need for the articles saying "make sure a beneficiary is named" in the newspaper or web articles as all RRSPs would have a beneficiary named, right? 

I see a lot of these type articles so there must be a fair number of RRSPs that don't name one.




carverman said:


> ... here is the link on the info I mentioned above..if it were me..I'd be going after Scotia bank for their error of omission putting down a benificiary...


Problem is ... it is the RRSP holder *choice*. The article starts "An RRSP holder *can name the beneficiary * ... " which implies the RRSP holder can also chose to not name one.

Now that I think about it ... when I opened my brokerage RRSP decades ago, I told them to let me think about it and set the beneficiary about a week after opening the RRSP.


From what I recall of the RRSP paperwork, the sheet that included the beneficiary had to be initialed by me so if the beneficiary name was left off, unless that page was not initialed or signed ... it likely will be seen as the account holder's mistake.


Cheers


*PS*

I forgot to point out that I don't believe post-humous beneficiary designations are allowed. Otherwise, the articles saying essentially that it is important to get right while one is alive would be including a section say "here's what to do if you messed up".

Plus the urgency would be much less as only when both spouses died at the same time would there be an issue.


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## carverman (Nov 8, 2010)

Eclectic12 said:


> That is not my understanding.
> 
> Scotia has to identify that a beneficiary can be named on the form but where the individual does not fill it in or asks to register one later, I do not believe there is a legal requirement to have one filled out.
> 
> If the RRSP couldn't be opened without naming one then there should be no need for the articles saying "*make sure a beneficiary is named*" in the newspaper or web articles as all RRSPs would have a beneficiary named, right?


Well, yes..maybe..who knows what the intention of the RRSP holder was at the time..maybe they or the bank rep was not paying
attention? 

I suppose if one is going through a divorce.maybe not, but the courts in that case would still divy up the RRSPs and do a rollover from one RRSP to another as was in my case and my ex.

it didn't matter who was the named beneficiary in my case..all marital assets during the marriage was split 50-50.
Now in THIS case, if the RRSP is included as part of the deceased "estate', then more than likely PROBATE FEES would apply..unless of course, the RRSP in question has been cashed, but I cant even see if that is possible as the bank may see it as a legal obstacle and has to clear that with somebody.



> I see a lot of these type articles so there must be a fair number of RRSPs that don't name one.


Well people have their own reasons for not naming a beneficiary..just like life insurance..which would add complexity and make it payable to the estate, but life insurance is different..it is not taxable. 



> From what I recall of the RRSP paperwork, the sheet that included the beneficiary had to be initialed by me so if the beneficiary name was left off, *unless that page was not initialled or signed *... it likely will be seen as the account holder's mistake.


or the bank officers mistake..


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## Mukhang pera (Feb 26, 2016)

carverman said:


> not quite sure what you are asking. if your mother and father were still married at time of her death, there is no "mother's estate", any assets are just passed to the surviving marriage partner which happens to be your father, also named executor.
> i


Carver, are you sure of that? No "mother's estate"? All her assets simply devolve to her husband? That very strongly suggests that married people have no freedom of testation. Whatever they own flows to the surviving spouse whether they like it or not. An odd concept. 

You are in Ontario, I note. Been awhile since I attended law school there, but that was not the law there at the time. I am not sure what has changed. I say that because I had an uncle in Ontario pass not that long ago. His estate had a net value of about $7 million. Most of what he and my aunt owned was in his name. Theirs was a "traditional marriage" of over 50 years. 

My aunt was always well provided for, but my uncle shared little of his financial dealings with her. In any event, by his will he divided his estate equally between his wife and his son. My aunt was a bit pissed about that, not because she needed the extra $3.5 million, but because she felt that as the surviving spouse all should have come to her and, if she chose to benefit the son then fine, but she resented (still does) the fact that my uncle made that decision without asking her. She's well up there in years and does not need the bucks and I'm sure when she goes, her son will get most of it anyway. But she believes the entire estate should have vested in her, leaving it up to her to benefit the son as she saw fit. The point being, if you are right, my aunt was robbed. All should have come to her by operation of law. 

However, as I apprehend the law - and in BC I know beyond peradventure that I am right - a testator in my uncle's shoes was free to leave his estate as he wished, subject to what in BC is called the Wills Variation Act. It requires a testator/testatrix to make "adequate provision" for a spouse and others who might have a legal or moral claim against the estate. This kind of "social legislation" pays lip service to preserving freedom of testation, while at the same time saying you had better leave your estate as the court thinks it should be left, or your will will be relegated to the dustbin and the court will decide who gets what.

As for the issue being bruited about here suggesting there was an egregious bank error, gross negligence, etc. in failing to name an RRSP beneficiary, I agree with those who say there is no legal requirement to name a beneficiary. If there is no named beneficiary, then the corpus of the RRSP would pass to the estate (subject, of course, to carver's view that there can be no estate when the RRSP owner happens to be married. Then the surviving spouse is the _de jure_ beneficiary.) So, if the owner of the RRSP is content with that result, why should the law force said owner to designate a beneficiary? 

Let's suppose for the moment that, when setting up an RRSP, the owner has no close family or friend(s) he or she would care to benefit. Why should the law say "Well, you must name someone, or you will not be permitted to own an RRSP." Sounds a bit silly. If anyone can come up with the statutory provision dictating that result, please share.

There is, as well, a danger in designating a beneficiary. Things change. Let's say our hypothetical RRSP owner gets divorced, but forgets to change the designation from, say, his former wife to his new wife. When he dies, the law will apply the doctrine of _tuffius tittius_ and the ex will laugh all the way to the bank. If there is no named beneficiary and the RRSP forms part of the estate, the current wife is more likely to take. The RRSP will then pass as per the will - either as a specific bequest, or as part of the residue - or, if there is no will, the current wife will still benefit under the Administration Act (or whatever called in the jurisdiction in question), which decrees how the estate will pass upon an intestacy.

Returning to the OP's difficulty, I find myself in respectful agreement with the following:




OptsyEagle said:


> Basically the executor asked Scotiabank to pay the proceeds to the estate and issue a T4RRSP afterwards and it sounds like that is exactly what they did. I agree, it now sounds like the executor may not have known that was what they were asking for, but if that is the case, we now know who made the mistake.
> 
> Now, all that being said, I am not familiar with the form he mentioned so perhaps this is a situation that can be rectified with the government, not the bank. He said the father contributed some of the money to the RRSP. Perhaps he might be able to do a tax amendment to at least get that money rolled into his RRSP, without the T4RRSP. Even if he can do that, he would need to be aware of the fact that any money that did not go into his fathers RRSP, would definitely be taxable in his mothers estate...and if his father received a reduction in his taxes for that contribution, in 2015 on his taxes owed, that refund would all get clawed back as well. Depending on the difference in tax brackets, there may not be that much tax money saved. He would have to first find out if it can be done and then do the calculation to see if it is worth the effort.


It would appear that this is a bit of a case of seeking to close the barn door after the horse has bolted. But it may not be irretrievable, as Optsy suggests. It might just be possible to unravel what has transpired. Yes, it might require holding one's nose and engaging in some grovelling that the feet of the CRA, asking that the paperwork that should have been done some time ago be accepted _nunc pro tunc_.


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> Carver, are you sure of that? No "mother's estate"? All her assets simply devolve to her husband? That very strongly suggests that married people have no freedom of testation. Whatever they own flows to the surviving spouse whether they like it or not. An odd concept.


I also question if it could be true ... everything I have read is that when one dies, there is an estate. One of the main points of estate planning is to send whatever assets possible to the beneficiary without increasing the taxable income on the deceased's last tax return and/or reducing probate fees.

The "no estate" process suggested is contradicted by the articles warning people to confirm their registered accounts have the correct beneficiary attached. The articles seem pretty clear that the wrong or no beneficiary will in most cases lose the opportunity to defer paying taxes on these accounts.

After all, the description is that where one has the spouse as a beneficiary - a situation that is not usually available (tax deferred transfer to another RRSP that has a different annuitant) will be made available.


I can follow how the divorce laws may over-ride what the RRSP holder may want as the specific beneficiary but that's a different situation than having no beneficiary.


Cheers


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## OptsyEagle (Nov 29, 2009)

The mother has an "estate". I am not sure what carver was alluding to with that statement.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> Well, yes..maybe..who knows what the intention of the RRSP holder was at the time..maybe they or the bank rep was not paying attention?


All that there is to document it is the form with the RRSP annuitant's signature, with a section for designating the beneficiary.

Based on the bank requiring initials two decades ago and the more recent example where a co-worker plus spouse setting up a spousal RRSP (they were asked three times to re-read the signed paperwork for beneficiary plus accuracy ... it would seem that a fair amount of attention is being paid to the process.




carverman said:


> I suppose if one is going through a divorce ...


Yes, divorce law will override what is named on the paperwork ... but that does not apply to the OP AFAICT.




carverman said:


> Now in THIS case, if the RRSP is included as part of the deceased "estate', then more than likely PROBATE FEES would apply...


I am not sure what the "if" for including the RRSP is about ... as I understand it, with no beneficiary named - the RRSP is deemed to be collapsed where the income has to be reported on the deceased's tax return.

Hence the concern here CMF about having too much in one's RRSP at the date of death, where a large RRSP drives up taxable income tremendously.




carverman said:


> ... Well people have their own reasons for not naming a beneficiary ...


I am not sure why anyone would want to not name a beneficiary. Pardon the pun but I can see no benefits or merit to such a move. :biggrin:




carverman said:


> ... or the bank officers mistake..


It is possible but from my experience and those who have talked to me, it seems pretty rare.
The trouble is that unless both parties are there and/or there is a form with all the appropriate signatures identifying a beneficiary, it would be difficult to prove.

Never mind that as I say, twenty years ago I can recall the request to have me initial all the pages to open an RRSP, including the beneficiary page.


Cheers


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## Nerd Investor (Nov 3, 2015)

Form T2019 allows the executor and surviving spouse to jointly elect to have it taxed as a refund a premiums to the survivor, who can in turn defer the tax on that income by rolling it into their own RRSP. 
This should give you the tax result you want, you just obviously won't be able to avoid tax on the $$ that were withdrawn/spent.


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## OhGreatGuru (May 24, 2009)

In the first instance, this appears to the error of the two spouses for not having their estate in order, with a named beneficiary.

In the second instance, somewhat to my surprise, it would appear that CRA will allow the RRSP to be transferred to the surviving spouse, if that spouse is the beneficiary of the estate, even though they were not the named beneficiary/successor account holder. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/dth/mtr-eng.html This requires an election on the part of the survivor, and is the reason for T2019. I would partially fault Scotia Bank for not explaining this to the survivor, or explaining the consequences of having it paid "to estate". OTOH the survivor may well have given the bank the impression that he knew what he was doing, particularly as he needed some of the RRSP money to settle estate debts.

If this election is not made, all the proceeds of the RRSP are treated as income received by the estate, and taxed in the hands of the estate. It was the duty of the surviving spouse/executor to know this.

I don't know if CRA will allow OP to correct this retroactively. Did the survivor have unused RRSP room for the balance he contributed to his own RRSP? If not, does CRA think he has now overcontributed because it was not reported properly? If he had room, has he tried to deduct the contribution against his own income, while not reporting the income to the estate?

Suggest OP find out from CRA if they will allow a late filing of T2019 for the portion transferred to survivor's RRSP. Whatever their answer, amendments to the Final & Estate Returns; and probably to survivor's Return as well, are going to be needed.


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## carverman (Nov 8, 2010)

Eclectic12 said:


> I am not sure what the "if" for including the RRSP is about ... as I understand it, with no beneficiary named - the RRSP is deemed to be collapsed where the income has to be reported on the deceased's tax return.



yes, you are right. Just talked to my friend who handled her mom's estate and she mentioned that if there is no beneficiary named by the
RRSP holder, after death, it has to go to probate and pay the fees and there will be delays encountered in case somebody comes forward to claim something. It sounds like the husband may be SOL in getting it tax free now.

However,CRA has another form RC4177 (indicated on the bottom of form T20190 which mentions..

In the case of the death of a PRPP member, t*he surviving
spouse or common-law partner may be named the successor
member. As the successor member he or she becomes the
member of the PRPP by acquiring all the rights in respect of
the deceased member’s account under the PRPP*. The
successor member is then entitled to receive a lump-sum
amount from the PRPP or can choose to transfer the funds
directly, on a tax-deferred basis, into another investment
plan such as another PRPP, an RRSP, RRIF, SPP, or
registered pension plan (RPP). In addition, the funds from
the PRPP can be transferred to a licensed annuity provider
to acquire a qualifying annuity for the individual.
In the case *where there is no successor member, we consider
that the PRPP member received, immediately before death,
an amount equal to the FMV of all property under the PRPP
at the time of death. *This amount and any other amount the 
annuitant received from the PRPP during the year have to be
reported on the deceased annuitant’s income tax and benefit
return for the year of death.

tax laws are so complicated.


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## Eclectic12 (Oct 20, 2010)

OhGreatGuru said:


> ... In the second instance, somewhat to my surprise, it would appear that CRA will allow the RRSP to be transferred to the surviving spouse, if that spouse is the beneficiary of the estate, even though they were not the named beneficiary/successor account holder.


Correct me if I am wrong ... but while this election helps a bit, it does not sound the same as naming the beneficiary, where the "transfer" is tax deferred and does not require RRSP contribution room.

The link talks about a T4RSP, box 16. This seems to be saying the RRSP income gets shifted to the surviving spouse but is still taxable. Where one has RRSP contribution room available, one can reduce the tax but where one is over 71 - this seems to be shifting the lump sum income from one spouse to the other.


Or am I missing something?


Ever bit helps ... but there still seems to be strong incentive to make sure the spouse is named as the RRSP beneficiary.

Cheers


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## twa2w (Mar 5, 2016)

The roll-over to a spouse does not require contribution room, and is very similar to having the spouse named as a beneficiary. The paperwork and process is obviously more complex of course. The election to rollover the RSP likely should have been done in 2015 and I believe it is too late now. If the surviving spouse has contribution room(enough to put in the full amount of the deceased spouses RSP) then it may work out better if the deceased spouse was in a lower tax bracket. »The deceased spouse would pay tax at their lower rate and the surviving spouse would get a deduction at the higher rate. Unless this happened then likely worse off.

As for the bank providing not advice on this, the bank has to be careful on what advice they are allowed to give. The estate department within the bank is there to assist in expediting the estate. Tax advice of this nature is not their mandate as they are not fully aware of the decedents and survivors full situation.
Even financial planners have to be careful in giving tax advice on certain matters/situations.

As to not naming a beneficiary, either the RSP is very old from back when everything was done on paper, or the client declined to name a beneficiary. This is actually more common than most people think. Most banks flag Registered plans without beneficiaries and have call lists. Either the deceased was not reached or she was and was told but did not follow up with a visit to the bank to add the beneficiary. The executor could always ask for a copy of the paperwork re the beneficiary. It is possible there is a beneficiary named but it did not get input in the system but unlikely.

Cheers
J


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## twa2w (Mar 5, 2016)

"The link talks about a T4RSP, box 16. This seems to be saying the RRSP income gets shifted to the surviving spouse but is still taxable. Where one has RRSP contribution room available, one can reduce the tax but where one is over 71 - this seems to be shifting the lump sum income from one spouse to the other"

In a rollover situation, the receiving spouse does show the income from the decedents RSP but they get to claim a corresponding offsetting amount for the contribution to their own RSP (contribution room not required). If the surviving spouse is over 71, it can be rolled into their RIF.
The paper work/ process is a little complicated


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