15 August 1994 External T.I. 9418855 - PAYMENT OF RRIF MINIMUM AMOUNT TO ESTATE

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether RRIF carrier can pay "minimum amount" to estate of first annuitant where successor annuitant named in the contract.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

Wording of 146.3(1)(f) and 146.3(2)(a)

XXXXXXXXXX 941885

Attention: XXXXXXXXXX

August 15, 1994

Dear Sirs:

Re: Registered Retirement Income Fund (RRIF): Payment of Minimum Amount to Estate

This is in reply to your letter of June 2, 1994, which was forwarded to us by the Surrey Taxation Centre. You ask whether the "minimum amount" under a RRIF may be paid to the estate of the first annuitant although the spouse has been named as the successor annuitant. You advise that if the successor annuitant receives the payment and is required to bring it into income, he will not be eligible for the income supplement.

The "minimum amount" as defined in paragraph 146.3(b.1) of the Income Tax Act must be paid to the annuitant in the year and there is no authority in the Income Tax Act to pay it to the estate of the first annuitant. Unless as otherwise stated all references to the Income Tax Act are to the Income Tax Act S.C. 1970-71-72, c. 63 as amended, consolidated to June 10, 1993 - the "Act".

To explain further, a "retirement income fund" is defined in paragraph 146.3(1)(f) of the Act to mean an arrangement under which the carrier undertakes to pay to the annuitant and, "where the annuitant so elects, to the annuitant's spouse after the annuitant's death", amounts each year which total not less than the lesser of the minimum amount and the fair market value of all the property in the RRIF.

In the case described by you, the annuitant elected to have her spouse named the successor annuitant, and the carrier agreed to pay the minimum amount to the successor annuitant. There would be nothing in the RRIF contract which would permit the carrier to pay the minimum amount to the estate.

Furthermore, pursuant to paragraph 146.3(2)(a) of the Act, the terms of the RRIF may only permit the carrier to make the payments described in paragraphs 146.3(2)(d) and (e) and in paragraphs 146.3(1)(f) and 146.3(14)(b) of the Act. Aside from the payment of the minimum amount to the annuitant or successor annuitant discussed in the previous paragraph (i.e. the payment described in paragraph 146.3(1)(f) of the Act), these various provisions permit the payment of all or part of the RRIF property upon death where the spouse is not named as the successor annuitant, the division of the RRIF property between spouses upon marriage breakdown, and the transfer of all or part of the RRIF property in excess of the minimum amount to another RRIF of the annuitant. In the latter case, the transferor RRIF must retain property equal in value to the minimum amount (or the fair market value of the RRIF property, whichever is less) so that it is paid to the annuitant in the year of the transfer.

The foregoing comments are an expression of opinion only and are, therefore, not binding on the Department. We trust, however, that they explain the requirements of the Act satisfactorily.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate
Policy and Legislation Branch