3 October 1997 External T.I. 9724285 - TRANSFERS TO ACQUIRE ANNUITIES

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:

Under the Income Tax Act, can an RPP be required to transfer amounts at a member's option to purchase an annuity?

Position:

No

Reasons:

Regulation 8502(c) provide that benefits must be paid in accordance with the plan as registered and in accordance with any designated laws (ie federal or provincial PBSA) There are no provisions in the Act which require the transfer of any amounts.

XXXXXXXXXX 972428

October 3, 1997

Dear Madam:

Re: Transfer of amounts from Registered Pension Plans

This is in reply to your letter of September 10, 1997, in follow-up to our letter of August 19, 1997 (our file 972107).

It is our understanding that you wish to transfer certain amounts out of a registered pension plan to acquire an annuity or to enhance an existing annuity. In this respect, you have asked us to confirm whether an option of transfer must be offered under the provisions of the Income Tax Act (the "Act")

The Act requires a registered pension plan to provide benefits in accordance with the terms of the plan as registered, subject to certain limitations thereon, and to provide benefits that the plan is required to provide by reason of certain designated provisions of the law of Canada or a province, such as a Pension Benefits Standards Act of a province. There are no requirements under the Income Tax Act that require a plan to provide an option to its members to have amounts transferred out of the plan.

We regret we could not provide you with a more favourable reply but trust the above comments will be of assistance to you.

Please find enclosed the Plan Administrators' Past Service Pension Adjustments Guide as requested.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch