XXXX G. Kauppinen (613) 995-0051
July 3, 1986
Dear Sirs:
This is in reply to your letter dated June 6, 1986 regarding a registered retirement savings plan ("RRSP").
You have enquired as to whether a RRSP can provide for fixed term annuities to age 90 (term certain annuities) after the RRSP matures.
In accordance with paragraph 146(1)(j) of the Income Tax Act ("Act"), an issuer of an RRSP must provide for the annuitant a retirement income commencing at maturity. Paragraph 146(1)(i.1) of the Act defines "retirement income" as being a life annuity with or without a guaranteed term or a fixed-term annuity providing benefits up to and including age 90. The guaranteed term in the case of a life annuity, or the term in the case of the fixed-term annuity, cannot exceed a term of years equal to 90 minus either
(a) the age in whole years of the annuitant at the maturity of the plan, or
(b) when the annuitant's spouse is younger than the annuitant and the annuitant so elects, the age in whole years of the spouse at the maturity of the plan.
The guaranteed term for a plan entered into before the 14th day of March,1957, cannot exceed 20 years.
We refer you to Information Circular 72-22R7, paragraph 58, in this regard. Both life annuities and annuities for a fixed term may be of the joint and last survivor type. Also, retirement income may also consist of a combination of a life annuity and a fixed term annuity.
It should be noted that the Notice of Ways and Means Motion to amend the Act, which was tabled in the House of Commons on June 11, 1986, contains proposed legislation which, if enacted into law, would allow an RRSP to mature and annuity payments to commence at any time before the end of the year in which the annuitant becomes 71 years of age. This would remove the existing prohibition against commencing annuity payments under a RRSP before the annuitant becomes 60 years of age.
We trust the foregoing is of assistance.
Yours truly,
for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch