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:
Can the portion of pension surplus entitlements that may be used to provide additional pension benefits allowed under the Act be transferred to a RRIF?
Position:
No
Reasons:
No provision in the Act that provides for such transfer.
973104
XXXXXXXXXX M.P. Sarazin
December 2, 1997
Dear Sir:
Re: Transfer of Pension Surplus to a Life Income Fund ("LIF")
This is in reply to your letter dated November 24, 1997, wherein you requested a comfort letter from Revenue Canada to allow you to transfer a portion of your pension surplus entitlement, representing the additional benefits that could be provided under the terms of the XXXXXXXXXX pension plan, to a LIF.
The pension plan administrators have advised you that since you are over 71 years of age you have to take the surplus entitlement in the form of a cash payment or use it to provide additional pension benefits through the use of an annuity to the maximums allowed under the Income Tax Act (the "Act") and Income Tax Regulations with any excess being paid out as a cash payment. It is your understanding that there is proposed legislation introduced by the Department of Finance that will allow you to transfer the amount that could be used to provide the additional pension benefits through the use of an annuity to a LIF.
It is our understanding that a LIF, which is governed by provincial law, is generally registered as a registered retirement income fund ("RRIF") for purposes of the Act but it is subject to additional rules contained in the provincial legislation. However, we are not aware of any existing or proposed legislation that provides for the transfer of pension surplus entitlements to a RRIF and, as a consequence thereof, we are not able to provide you with the requested comfort letter. In our view, the pension plan administrators have described the alternatives that are available to you.
We trust that the above comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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