Commutation payments from your RRSP

If you receive commutation payments from your RRSP (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 tax-free. Instead, if you want to transfer these amounts tax-free to another registered plan or fund, make sure you inform the payer to transfer them directly.

A commutation payment from your RRSP may be transferred directly to an RRSP, a RRIF, or to buy yourself an eligible annuity. You can use Form T2030, Direct Transfer Under Subparagraph 60(l)(v), to make this request. If you receive the commutation payment in cash or by cheque, the payment is not a transfer and is not tax-free.

Notes
Amounts cannot be transferred to an RRSP if you were over 71 years old at the end of the tax year.

For the purposes of this type of payment, these comments below do not apply to the Saskatchewan Pension Plan (SPP).

Completing your tax return

This payment is shown in box 22 of your T4RSP slip. Report this amount on line 129 of your return.

• If the payment is transferred directly to your RRSP, complete and submit Schedule 7, RRSP Unused Contributions, Transfers and HBP or LLP Activities, with your return. Show the amount of the payment transferred on line 240 of this schedule and claim it on line 208 of your return.
  
  
• If the payment is transferred directly to your RRIF or used to purchase an eligible annuity, claim the amount on line 232 of your return.