Transferring the eligible part of a retiring allowance

You can only transfer the eligible part of your retiring allowance to your own RPP, SPP, RRSP or PRPP.

The eligible part is:

• $2,000 for each year or part-year of service before 1996 in which you were employed by the employer, or a person related to the employer from whom you received the retiring allowance
• you can also transfer an additional $1,500 for each year or part-year of service before 1989 in which you had earned no pension or DPSP benefit from employer contributions that were either vested in you at the time of payment or that were previously paid to you

You cannot transfer the eligible part of your retiring allowance to your spouse’s or common-law partner’s RRSP. You may be able to contribute amounts you received from your retiring allowance to your own or your spouse’s or common-law partner’s RRSP, up to the limits explained in Chapter 2 of guide T4040, RRSPs and Other Registered Plans for Retirement.

You will receive a contribution receipt for any amount directly transferred to your RRSP.

No tax is withheld if your employer directly transfers the eligible part of your retiring allowance.

The direct transfer of your retiring allowance to your RPP may result in a pension adjustment (PA) that will affect your RRSP deduction limit in subsequent years. For more information, contact your plan administrator.

You cannot transfer any part directly to a spousal or common-law partner RRSP. Also, amounts cannot be transferred to an RRSP if you were over 71 years old at the end of the tax year. For more information, refer to RRSP options when you turn 71 and Income Tax Folio S2-F1-C2, Retiring Allowances.

Filling out your income tax and benefit return

The eligible portion of your retiring allowance will be reported in box 66 of your T4 slip and box 67 will show the part of your retiring allowance that is not eligible. On a T3 slip, the eligible part of a retiring allowance appears in box 47.

Report the retiring allowance shown in boxes 66 and 67 of your T4 slip, or in box 26 of your T3 slip on line 13000 of your income tax and benefit return.

Claim a deduction for the amount you transfer to your RPP on line 20700 of your income tax and benefit return. Claim a deduction for the amount you transfer to your RRSP on line 20800 of your income tax and benefit return. Write the amount of the transfer on line 24640 and in box 15 of Schedule 7.

Include the full amount of all retiring allowances as income on line 13000. If some or all of a retiring allowance was transferred into an RRSP, the transferred amount should be shown as a deduction on lines 24640 and 24500 of Schedule 7.