Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: RRSP Retirement Income
This is in reply to your letter of December 15, 1992, concerning the above-noted topic which was addressed to the Registered Plans Division of Revenue Canada and referred to us for reply.
As your letter states, Paragraph 146(1)(i.1) which defines "retirement income" was added to the Income Tax Act (the "Act") in 1978 and has remained unamended since its inception. In his book, The Delaney Report on RRSPs, 1992 Edition, Mr Delaney provides, at page 154, the quotation excerpted by you in your letter. In this version, however, his reference to "1985" is corrected to read "1986" and it appears to us that this is a reference to the amendments enacted in that year to allow greater flexibility in the terms of an RRIF than was previously allowed.
Paragraph 146(1)(j) of the Act requires that an RRSP must provide for the annuitant a "retirement income" commencing at maturity. Paragraph 146(1)(i.1) of the Act requires this retirement income to be in the form of one of two types of annuities;
1) a life annuity, or
2) a fixed term annuity.
The life annuity must be an annuity for life and can have a guaranteed term of any length up to age 90 minus the age of the annuitant at the date of maturity of the plan or the age of the annuitant's spouse if the spouse is younger. In other words if an annuitant at age 65 with a spouse at age 60 at maturity of the plan were to choose the life annuity (subparagraph 146(1)(i.1)(i) of the Act) the annuity would have to be paid to him for life but could have a guaranteed term of up to 30 years (90 minus the age of the spouse at maturity). The only exception to this rule is where the plan being matured was entered into prior to March 14, 1957 in which case the guaranteed term of the life annuity under subparagraph 146(1)(i.1)(i) of the Act cannot exceed 10 years.
If the annuitant on maturity of his plan chose a fixed term annuity (subparagraph 146(1)(i.1)(ii) of the Act) the annuity must be paid to at least age 90 of the annuitant. In the example above, the fixed term could be either 25 years (90 minus the age of the annuitant) or 30 years (90 minus the age of the spouse) but no other term.
With respect to the quotation, we can not make any conclusive remarks as to the basis for or the intent of the comments made by Mr. Delaney.
However, from our reading of the quotation, it appears to us that the author is stating that some issuers are now providing annuities with various guaranteed terms up to the maximum provided within the retirement income definition. If our understanding is correct, this quotation would be entirely consistent with our above comments.
We trust that our comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1993
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1993