Monsieur, who died in November, bequeathed all his RRIF to his surviving spouse. In 2016-0651711C6 F, CRA indicated that even if Monsieur had withdrawn the minimum amount before his death, if the transfer of the RRIF to the surviving spouse was not effected until the subsequent year, the amount which could be transferred free of tax was reduced by the minimum amount for that subsequent year by virtue of the s. 146.3(6.11) formula. This reduction would not occur if the transfer occurred in the year of death.
(a) In computing the minimum amount for that subsequent year respecting the RRIF of the deceased, should one use the age of the deceased on January 1 of the calendar year of his death, his age on January 1 of the subsequent year or the age of the surviving spouse on January 1 of the year of the transfer to her RRIF or RRSP?
(b) Assuming that the death occurred before the deceased could contribute the minimum amount for the year of death, but the transfer of his RRIF to the surviving spouse was not made until the following calendar year, does the minimum amount impact on the RRIF of the deceased occur once, namely, only in the year subsequent to that of death?
CRA responded:
(a)
Under Element B of the definition of "minimum amount" in subsection 146.3(1), the prescribed factor can correspond to the age of the first annuitant under the RRIF, or if the first annuitant so elects before the issuer makes a payment out of the RRIF, the age of the spouse or common-law partner at the time of the election. The prescribed factor for the year is the factor in the table, as applicable, in subsections 7308(3) and (4) of the Income Tax Regulations that corresponds to the age in whole years attained by the individual at the beginning of that year or that would have been so attained by the individual if the individual had been alive at the beginning of that year.
…[F]or purposes of calculating the eligible amount determined under subsection 146.3(6.11), the taxation year referred to in that subsection is the taxation year referred to in paragraph 60(l), i.e., the year of the inclusion of the designated benefit in computing the income of the spouse or common-law partner income under subsection 146.3(5).
Thus, in a situation where the prescribed factor is the age of the first annuitant of the RRIF, the minimum amount for the year, as set out in B and C of the formula in subsection 146.3(6.11), is based on the age in whole years that the deceased annuitant would have attained at the beginning of the year had he or she been alive in the taxation year in which the designated benefit was included in computing the income of the spouse or common-law partner.
(b)
There is … no requirement for a RRIF issuer to pay the minimum amount by withdrawing from a retirement income fund after the death of the last annuitant. …
Where the designated benefit is received by the spouse or common-law partner in the year following that of the death of the last annuitant of a RRIF, the eligible amount will be equal to the designated benefit after deducting the minimum amount to be withdrawn from the RRIF for the year in which the benefit is received.