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:
1)Can the estate of a surviving spouse be named as beneficiary of an annuity for a period that precedes the maturity of the RRSP plan?
2)Does maturity occur on the first payment of the annuity?
Position TAKEN:
1) No
2) No
Reasons FOR POSITION TAKEN:
1)An individual's spouse may only become an annuitant under a plan if the individual dies after the maturity of the plan.
2)Maturity occurs when retirement income commences which is the date the contract is executed.
950829
XXXXXXXXXX M.P. Sarazin
Attention: XXXXXXXXXX
June 14, 1995
Dear Sirs:
This is in reply to your letter dated March 17, 1995 wherein you requested our comments regarding the date that would constitute maturity of a registered retirement savings plan ("RRSP") annuity purchased from an insurance company by an individual.
You question whether an RRSP insurance contract can provide for payment to the estate of the "survivor annuitant" where the annuitant dies before the commencement of annuity payments. As we understand the situation, the RRSP purchased is as described in paragraph (a) of the definition of "retirement savings plan" in subsection 146(1) of the Income Tax Act (the "Act") and the retirement income to be provided under the RRSP is as described in paragraph (b) of the definition of "retirement income" in subsection 146(1) of the Act. Your concern also involves the definitions of "annuitant" and "maturity" in subsection 146(1) of the Act.
Under paragraph (a) of the definition of "retirement savings plan", the plan must provide a retirement income commencing at maturity for the individual. Paragraph (b) of the definition of "retirement income" states that it means an annuity commencing at maturity, payable to the annuitant, or to the annuitant for the annuitant's life and to the spouse after the annuitant's death, for a term of years... The term "maturity" is defined to mean the date fixed under a retirement savings plan for the commencement of any retirement income the payment of which is provided for in the plan. In our opinion, the annuity commences when the contract is executed and, unless the annuity contract provides for payment in advance, the first payment would not normally coincide with execution of the contract but would generally occur after "commencement".
The term "annuitant" means until such time after maturity of the plan as his or her spouse becomes entitled, as a consequence of the spouse's death, to receive benefits to be paid out of or under the plan, the individual referred to in paragraph (a) or (b) of the definition "retirement savings plan" in this subsection for whom, under a retirement savings plan, a retirement income is to be provided. Consequently, an individual's spouse may only become an annuitant if the individual dies after maturity of the plan. We are of the view that the individual would have to name his/her spouse as the beneficiary for any period prior to the maturity of the plan and the estate of the surviving spouse could be named as the beneficiary of the plan for the period subsequent to maturity of the plan.
We regret that our response could not be more favourable.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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