9 June 2010 External T.I. 2009-0348161E5 - Transfer of unmatured spousal RRSP to RRIF

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.

Principal Issues: Can an unmatured spousal RRSP be transferred to the taxpayer's non-spousal RRIF?

Position: Yes, as long as both plans have the same annuitant.

Reasons: Based on paragraph 146(16)(a) of the ITA, an unmatured spousal RRSP can be transferred to a RRIF with the same annuitant. The RRIF becomes a spousal RRIF.

XXXXXXXXXX
			2009-034816
			P. Waugh
June 9, 2010

Dear XXXXXXXXXX :

Re: Transfer of Spousal RRSP to RRIF

We are writing in response to your letter dated September 23, 2009 wherein you requested written confirmation that an unmatured spousal Registered Retirement Savings Plan ("RRSP") can be transferred to your existing Registered Retirement Income Fund ("RRIF").

You advise that you would like to transfer your unmatured spousal RRSP into your RRIF for which you are the annuitant of both plans. Your RRIF was opened when you previously transferred a non-spousal RRSP into the RRIF. More than three years have passed since your husband has made any contributions into the spousal RRSP.

Our Comments

Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

Pursuant to paragraph 146(16)(a) of the Income Tax Act ("the Act"), a transfer from a spousal RRSP to a non-spousal RRIF is permitted as long as both plans have the same annuitant and all other conditions are met (e.g. the transfer takes place before maturity of the spousal RRSP). However, because of the definition of "spousal plan" in subsection 146(1) of the Act, any RRIF which receives property from a "spousal plan" will thereafter be treated as a "spousal plan" for the purposes of the Act. Should you transfer your spousal RRSP to your RRIF, the RRIF will become a "spousal plan" (i.e., a spousal RRIF) under the Act.

The consequences of the "spousal plan" designation of a RRIF, however, are limited to the attribution of income to the contributor spouse in accordance with subsection 146.3(5.1) of the Act. In the event that your husband has not contributed to your spousal RRSP in the past three calendar years prior to the transfer to the RRIF, there will be no attribution of income upon receipt of amounts out of your RRIF in respect of the original property transferred.

While there is nothing in the Act that prevents spousal and non-spousal funds from being combined for transfers under paragraph 146(16)(a) of the Act where the annuitant is the same individual under both plans, some financial institutions may have internal policies that prohibit the combining of spousal and non-spousal funds in the same RRSP or RRIF. Where they exist, these internal policies are policies of the financial institutions and are not requirements of the Act or CRA.

Further information on the transfers of funds between registered plans is contained in our Interpretation Bulletin, IT-528, Transfer of Funds Between Registered Plans.

The role of the CRA is to administer and enforce the Act as passed by Parliament. Amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue your concerns further, you may write to the officials in the Tax Policy Branch at the Department of Finance, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.

Yours truly,

Mary Pat Baldwin, CA
for Director
Deferred Compensation Arrangements and Retirement Plans Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch