Donating RRSPs and RRIFs as a bequest

Canadian tax policies that allow Register Retirement Savings Plans and Registered Retirement Investment Funds (RRSPs and RRIFs) have led many of us to shield significant amounts of money from tax for use in retirement.

You can donate all or part of an RRSP or an RRIF to a charity like Mill Woods United Church at any time. You can also donate them as a bequest via your last will and testament.

Since assets can be transferred to the surviving spouse without tax penalty, it is a surviving spouse that most often makes a donation of an RRSP or RRIF to a charity like Mill Woods United Church. One can name multiple beneficiaries, including one’s family and charities.

Upon the death of a surviving spouse, the cash in a RRIF or RRSP becomes income, which can have tax implications. For this reason, donating a RRIF or RRSP to a charity can have positive tax implications.

When you make a donation of all or a portion of an RRSP/RRIF to the church, your estate is eligible to receive a donation receipt for the full value of your donation. The executor for your estate can then claim a tax credit for up to 100% of the net income on your final tax return. Any unused credits can be applied against your previous year’s income, again up to 100% of your net income. This means that you can make a significant charitable gift, and your estate and heirs reap the tax benefits of your generosity with reduced taxes on your estate.

A deferred donation is advantageous because, when plan assets are directly designated, they are not included in your estate and are not subject to probate fees. Your estate will receive a tax credit.

How to do this

To donate the proceeds of all or part of your Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) to Mill Woods United Church, you simply need to change the beneficiary information on the plan document and advise the institution holding your retirement account of the change. Always consult a qualified investment advisor. There is no need to change your will.