Registered pension plan (RPP) lump-sum payments

If you receive any of the types of amounts listed below (for example in cash or by cheque), you have to include them in your income for the year you receive them and you cannot transfer them on a tax-deferred basis. Instead, if you want to transfer these amounts to another registered plan or fund and defer the tax, make sure you inform the payer to transfer them directly.

If you transfer the amount to an RRSP you must be 71 years old or younger at the end of the year in wich you transfer the funds.

Defined benefit RPP lump-sum

The following RPP lump-sum amounts can be transferred directly to another RPP, an RRSP, a RRIF, a PRPP or an SPP:

• an RPP lump-sum amount that you are entitled to receive from your RPP
• an RPP lump-sum amount that you receive from your current or former spouse's or common-law partner's RPP because your current or former spouse or common-law partner has died
• an RPP lump-sum payment that you receive under a decree, order, or judgment of a competent tribunal, or under a written agreement relating to a division of property between you and your current or former spouse or common-law partner in settlement of rights arising from the breakdown of your relationship.

You and the RRSP issuer should fill out and submit Form T2151, Direct Transfer of a Single Amount Under Subsection 147(19) or Section 147.3.

Money purchase RPP lump-sum

The following RPP lump-sum amounts can be transferred directly to another RPP, an RRSP, a RRIF, a PRPP, SPP, or an ALDA:

• an RPP lump-sum amount that you are entitled to receive from your RPP
• an RPP lump-sum amount that you receive from your current or former spouse's or common-law partner's RPP because your current or former spouse or common law partner has died
• an RPP lump-sum payment that you receive under a decree, order, or judgment of a competent tribunal, or under a written agreement relating to a division of property between you and your current or former spouse or common-law partner in settlement of rights arising from the breakdown of your relationship.

For the direct transfer of MP RPP lump-sum amounts to an ALDA, use Form T2157, Direct Transfer from a Registered Plan to Purchase an ALDA.

Direct transfer of an RPP lump sum payment

In most cases, if you transfer an RPP lump-sum amount directly to another RPP, SPP, RRSP, PRPP or, to a RRIF, you do not have to include any part of the amount in your income, and you cannot deduct it. However, the Income Tax Act limits the amount you may transfer on a tax-deferred basis from a defined benefit provision of an RPP to a money purchase provision of an RPP, an RRSP, a PRPP, an SPP, or a RRIF.

Excess transfer of an RPP lump sum payment

If the amount you transfer is more than the limit, you have to include the excess transfer in your income. The T4A slip shows the excess transfer as pension income in boxes 018 and 108, which you report on line 13000 of your income tax and benefit return.

If you made the excess transfer to your RRSP, PRPP, or SPP for 2023, we consider you to have contributed it in the year in which you transferred it. Even if the excess transfer is made to your RRIF, we still consider you to have contributed it to your RRSP, PRPP, or SPP. In both cases, the issuer, carrier, or administrator will give you an RRSP, a PRPP, or an SPP receipt for this contribution.

You can deduct these RRSP, PRPP, or SPP contributions on line 20800 of your income tax and benefit return, up to your RRSP deduction limit for the year in which you made the transfer. If you cannot deduct the contributions because they are more than your RRSP deduction limit for the year, you can leave them in your RRSP, PRPP, SPP, or your RRIF and deduct them for future years up to your RRSP deduction limit for those years.

To find out how much you can deduct, see Where can you find your RRSP deduction limit.

Withdrawal from an RRSP or a RRIF

If you withdraw an excess transfer amount from an RRSP or a RRIF in 2023 and we consider you to have contributed an excess transfer to your RRSP, a deduction is available if you meet both of the following conditions:

• you did not previously deduct the excess amount as an RRSP contribution
• you included the excess amount in your income for the year you received it

You can use Form T1043, Deduction for Excess Registered Pension Plan Transfers You Withdrew from an RRSP, PRPP, SPP or RRIF, to calculate your deduction. Deduct the amount on line 23200 of your income tax and benefit return.