What Happens to an RRSP When You Die
RRSPs and RRIFs at death: full value taxed on the final return unless rolled to a spouse or dependent child, examples by province, and the beneficiary trap.
The short version
- When an RRSP or RRIF owner dies, the full value is generally added to income on their final return, as if it were cashed out the day before death.
- Two big exceptions: it can roll tax-free to a spouse or common-law partner, or to a financially dependent child or grandchild (with limits for a child who isn't infirm).
- On a $400,000 RRIF with $40,000 of other income, the extra tax is about $187,000 in Ontario, $180,000 in B.C. and $166,000 in Alberta. Close to half.
- Naming a beneficiary keeps the plan out of probate in the common-law provinces and territories. The tax is still owed by the estate, which can catch heirs off guard.
- If the investments drop after death and the plan is paid out by the end of the next year, the decline can be deducted on the final return.
What Happens to an RRSP When You Die
An RRSP is a deal with the government: you got a deduction going in, and you pay tax coming out. Death doesn't cancel the deal, it just calls the whole loan at once. A lifetime of RRSP savings can land on a single final return in the top bracket, which is how a careful saver ends up the biggest taxpayer of their life in the year they stopped needing money. The rules below decide who gets the money, who pays the tax, and how much of it can be put off.
Who Gets It, and Who Pays the Tax
| Who receives the RRSP or RRIF | Tax at death | What happens next |
|---|---|---|
| Spouse or common-law partner | None, if transferred to their RRSP, RRIF or an annuity | They pay tax when they withdraw. A RRIF can simply continue if they are named successor annuitant. |
| Financially dependent child or grandchild, infirm | None, if transferred to their RRSP, RRIF, RDSP or an annuity | Taxed to them as they withdraw |
| Financially dependent child or grandchild under 18 | Can be taxed to the child instead, often at a low rate | Can buy an annuity that pays out by age 18, spreading the income |
| Adult children, anyone else, or the estate | Full value taxed on the deceased's final return | The beneficiary gets the gross amount; the estate pays the tax |
"Financially dependent" generally means the child's net income in the year before death was under the basic personal amount, or under a higher limit for an infirm child. The final return itself is covered on the final tax return; the executor's side on executor duties.
Worried about the tax on your RRIF at death?
Tell the assistant your RRSP or RRIF value, age, province and who your beneficiaries are. It estimates the tax, shows what a spouse rollover saves, and what drawing it down earlier would do.
Example: A $400,000 RRIF
| Province (2026) | Extra tax on the final return | Left for the heirs |
|---|---|---|
| Ontario | about $187,400 | about $212,600 |
| British Columbia | about $180,400 | about $219,600 |
| Alberta | about $166,100 | about $233,900 |
| Any province, rolled to a spouse | $0 now | $400,000, taxed later as the spouse withdraws |
A 78-year-old with $40,000 of pension, CPP and OAS income and a $400,000 RRIF, no spouse. The RRIF pushes most of the final return into the top bracket. Run your own numbers with the estate tax calculator; for the spouse who inherits a RRIF, the RRIF minimum calculator shows what comes out each year after.
The Beneficiary Trap
Say a parent names one child as RRSP beneficiary and leaves the house to the other. The first child receives the whole $400,000. The tax bill, about $187,000 in Ontario, goes to the estate, and is paid out of the house. The child who got the house pays the other one's tax. That's rarely what anyone meant. If the estate can't pay, CRA can collect from the beneficiary who received the plan, so nobody escapes it entirely. Read more on inheritance tax.
Ways to Lower the Tax at Death
- Name your spouse as beneficiary, or as successor annuitant on a RRIF. Simplest and biggest.
- Withdraw more while alive in years you are in a lower bracket, such as early retirement before CPP and OAS; see the RRSP meltdown. Watch the OAS clawback.
- Move the after-tax money to a TFSA, which is tax-free at death; see TFSA vs RRSP.
- Convert at the right time: RRSP to RRIF by the end of the year you turn 71; see RRSP to RRIF and RRIF withdrawals.
- Make donations by will or beneficiary designation to a charity; in the year of death the credit can offset up to 100% of net income. See charitable donations.
- Name beneficiaries directly (outside Quebec) to skip probate; see probate vs income tax. In Ontario, $400,000 going through the estate costs $5,250 in estate administration tax.
RRSP at Death Questions
Is an RRSP taxed when you die in Canada?
Yes, generally. The fair market value at death is included in income on the deceased’s final return, unless it goes to a surviving spouse or common-law partner, or a financially dependent child or grandchild, who can defer the tax.
Can I leave my RRSP to my spouse tax-free?
Yes. If your spouse or common-law partner is the beneficiary and transfers it to their own RRSP, RRIF or an eligible annuity, there is no tax at your death. They pay tax later as they withdraw.
Who pays the tax on an RRSP left to my children?
The tax is on your final return and is paid by your estate, even though your named child receives the full amount. If the estate can’t pay, the beneficiary and the estate are jointly liable.
What if the RRSP loses value after death?
If the plan is fully paid out by the end of the year after the year of death, the drop in value after death can be deducted on the final return. Growth after death is taxed to the beneficiary or the estate.
Does an RRSP go through probate?
Not if a living beneficiary is named on the plan, outside Quebec. If the estate is the beneficiary or no one is named, the RRSP becomes part of the estate and probate fees apply.
What is a successor annuitant?
A spouse or common-law partner named to take over a RRIF after death. Payments simply continue to them, with no tax at death and no need to set up a new plan.
What happens to a RRIF when you die?
The same rules as an RRSP. If your spouse is named successor annuitant, payments simply continue to them. Otherwise the value at death is generally included on your final return, unless it goes to a spouse or financially dependent child or grandchild who can defer the tax.
Sources: CRA, T4040, RRSPs and other registered plans for retirement; CRA, Doing taxes for someone who died. Checked October 2026. Examples come from our 2026 rules engine with basic credits and the age and pension amounts; actual tax depends on the year of death and all other income. The rules for a financially dependent minor child (annuity to age 18) and an infirm child have conditions not covered here. Quebec rules on beneficiary designations differ.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.