CRA confirms that a spouse of a deceased RRIF annuitant must be still alive at the time of a payment out of the RRIF in order for the designated benefit rules to apply

When asked to explain its position that s. 146.3(6.2) cannot operate to exclude value of a deceased’s RRIF from his income and include that amount in the income of his surviving spouse or common-law partner (”Spouse”) or her estate where the Spouse was not alive at the time of the payment of the amounts in question out of the RRIF of the deceased, CRA indicated that such an amount could not qualify under either para. (a) or (b) of the “designated benefit” definition in s. 146.3(1).

Regarding para. (a), the joint designation referred to therein was required to be made jointly by the deceased annuitant's legal representative and the Spouse, and could not be made with the deceased Spouse's legal representative.

In order for para. (b) to be satisfied “the amounts must be paid directly to the Spouse” and not to the Spouse’s estate.

In sum, the Spouse must be alive at the time the amounts are paid to the Spouse or, if applicable, at the time the joint designation is made.

Neal Armstrong. Summary of 7 October 2022 APFF Financial Strategies and Instruments Roundtable, Q.8 under s. 146.3(1) – designated benefit.