| 5-912939 | |
| 19(1) | P. Spice |
| (613) 957-8953 |
February 5, 1992
Dear 19(1):
We are writing in reply to your letter of October 21, 1991, in which you ask whether you may pay an annuity directly out of your registered retirement savings plan (RRSP) or receive lump sum payments out of the RRSP.
You explain that you wish to maintain the RRSP investment in a mortgage of which you are the mortgagor but arrange for cash payments out of the RRSP to make up a 24(1) per month cash flow deficiency. The cash assets in your RRSP are insufficient to permit the necessary monthly cash payments but it would not be financially prudent to dispose of the mortgage. In addition, the RRSP is "locked-in" and, therefore, lump-sum payments are not permitted.
The Income Tax Act does not prohibit the payment of either lump sums or periodic payments out of an unmatured RRSP. The only requirement under the Act is that such payments are brought into income.
If your RRSP is "locked-in" under pension standards legislation, then that legislation will require that the RRSP be held to provide a periodic pension income to you after you reach a certain age. This requirement is not imposed by the Income Tax Act and we regret that we are unable to assist you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate