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:
An RPP provides for the commutation and payment of bridging benefits in a single payment. Can this payment be made in installments?
Position:
They can only be paid in accordance with the terms of the plan.
Reasons:
The regulations provide for the payment of bridge benefits in the form of periodic payments over a determinable period and as single payments if they are commuted. In any event the payments may only be made in accordance with the terms of the plan as registered. See ITR 8500(1) “bridging benefits” and “retirement benefits”, 8502(d)(i) and 8503(2)(M).
XXXXXXXXXX 982849
W. C. Harding
Attention: XXXXXXXXXX
November 18, 1998
Dear Sirs:
Re: Registered Pension Plan - Benefit Payment Options
This is in reply to your letter of November 4, 1998 in which you requested a ruling on behalf of XXXXXXXXXX with respect to the payment of amounts out of a Registered Pension Plan (“RPP”).
Since your enquiry deals with a factual situation, we cannot provide written confirmation of the tax implications inherent in particular transactions unless the transactions are outlined in a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R3. However, we can provide the following general comments which may be of assistance to you and your client.
Administrators of an RPP are required by paragraph 8502(d) of the Income Tax Regulations (the Regulations”) to make distributions in accordance with the terms of a plan as it is registered. Subsection 8503(2) also requires that bridging benefits may only be provided if they are paid on a periodic basis or, on commutation, as a single amount. The Regulations do not permit the commuted value of bridging benefits to be paid out on a periodic basis. Revenue Canada has no authority to permit the payment of amounts except as provided by the Regulations and the Income Tax Act.
We hope this information will be of assistance to you.
Yours truly,
Paul Lynch
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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