How to Name a Beneficiary on Your RRSP

A 64-year-old construction supervisor in London, Ontario dies in May with $440,000 in his RRSP. He named his daughter as the sole beneficiary on the bank's form ten years earlier, thinking it would "make things simpler" for her. The bank pays her the full $440,000 in July. The estate's accountant runs the deceased's final tax return that fall and finds the entire $440,000 included as income — pushed into the top marginal bracket — with roughly $200,000 in tax payable. The estate does not have liquid assets to pay it. The daughter receives the cheque from the bank, then a year later receives a demand notice for tax owed by an estate she did not administer.

The story is unusual only in the size. Naming the wrong category of beneficiary on an RRSP is the single most expensive mistake the average Canadian household can make in registered-account planning, and the form takes about ninety seconds to fill in correctly. This guide walks the actual rules.

What CRA calls a "qualifying survivor" #

The Canadian tax rules for an RRSP at death distinguish between two outcomes:^[1]

Default outcome: The full fair market value of the RRSP at the date of death is included as income on the deceased's final tax return. The estate or the deceased's legal representative pays the tax at the deceased's marginal rate, often pushing income into the top tax bracket because the entire RRSP is realized in one year.

Better outcome (refund of premiums / rollover): If a "qualifying survivor" is named as the beneficiary, the RRSP proceeds can be transferred to that survivor's own registered plan with the tax deferred until the survivor draws on it.^[3]

A qualifying survivor for refund-of-premiums purposes is one of:

• A spouse or common-law partner of the deceased, at the date of death.
• A financially dependent minor child of the deceased (or grandchild), where the dependency is not due to a physical or mental impairment.
• A financially dependent child or grandchild of the deceased with a physical or mental impairment.

For a spouse or common-law partner, the rollover is to the survivor's RRSP, RRIF, PRPP, SPP, or used to buy an eligible annuity.^[2]

For a financially dependent disabled child or grandchild, the rollover can be to that person's RDSP, with a lifetime maximum of $200,000 (across all RRSP/RRIF rollovers into that RDSP).^[2]

For a financially dependent minor child (no impairment), the proceeds are used to buy a term annuity payable to the child to age 18. This is the least flexible of the qualifying-survivor outcomes but still significantly better than the default tax hit.

Any beneficiary outside these categories — an adult child, sibling, parent, friend, ex-spouse, charity, or the estate itself with no qualifying survivor — receives the proceeds without a rollover, and the full RRSP value falls into the deceased's final tax return.

How beneficiary designation actually works #

Three mechanisms apply:

The designation is on the institution's form. Every bank, credit union, and brokerage that holds your RRSP has a beneficiary designation form. You can name a primary beneficiary, often a contingent (alternate) beneficiary, and percentages if multiple primaries.

This is by design: registered-account designations bypass probate and pay out directly to the named person.

The designation does not change automatically with life events. A divorce does not change the form. A new marriage does not change the form. A death of the named beneficiary does not change the form. The form changes only when you submit a new one.

A current beneficiary statement should be on file for every RRSP you hold. If you have multiple — say, an RRSP at your current bank, a locked-in RRSP from a former employer, and a small RRSP at the brokerage where you bought your first ETF — each has its own designation form and they may not all be current.

The estate route — when it can still be the right answer #

Most estate planning advice says "name a direct beneficiary; don't leave the RRSP to the estate." This is right most of the time but not all the time. Two situations where leaving the RRSP to the estate is the deliberate choice:

The estate has a qualifying-survivor beneficiary who would receive the RRSP indirectly. If the will leaves the residue to a spouse or common-law partner, and the estate receives the RRSP proceeds, the spouse can still claim the refund-of-premiums rollover by jointly filing Form T2019 with the legal representative.^[4] The form designates all or part of the estate-routed amount as a refund of premiums to the qualifying survivor. The mechanism is slightly more paperwork than a direct designation but achieves the same tax outcome.

The estate needs the liquidity to settle other debts. Some testators deliberately route registered accounts through the estate so the estate has the cash to pay debts, funeral costs, and taxes before distributing to beneficiaries.

In both cases the trade-off is probate. The RRSP becomes part of the probate estate, exposed to probate fees in provinces that charge them, and subject to the slower estate-distribution timeline.

Practical steps to take this week #

For each RRSP you hold:

• Log into the institution or call the branch and request a current beneficiary statement.
• Confirm the named primary is still alive and still the person you would choose.
• Confirm the contingent (alternate) beneficiary is in place.
• For non-qualifying primary beneficiaries (adult children, siblings, etc.), confirm you understand the tax implications and have either deliberately chosen the tax cost or arranged liquidity to cover it.
• For locked-in RRSPs from former employers, check the beneficiary designation specifically — these are often older designations that have not been touched in years.

For broader context, see the pillar guide on estate planning in Canada and the related articles on how RRSPs pass at death, TFSA at death, and how to update beneficiary designations.

What we focus on at It's Simple Will #

The Life Discovery Kit captures every registered account you hold, the institution, account-locator information, and the beneficiary on file. The annual review prompt then surfaces any account where the named beneficiary has changed circumstances or is no longer optimal. The Will Creator separately handles the deceased's will, and the two work together to reduce the chance of an old RRSP designation quietly producing a $200,000 tax bill on an otherwise well-planned estate.

The RRSP beneficiary form is the single highest-leverage piece of paperwork in most Canadian estate plans. Confirming it is right takes minutes; getting it wrong costs the family decades of savings.