Gifts of registered retirement assets

There are significant tax advantages when you donate money from your retirement funds — be it from a retirement savings plan, retirement income fund, company sponsored pension plans or Canada Pension assets — to the University of Calgary. In these cases, the tax credit you receive for giving a charitable gift usually offsets the tax owing on the distribution of the fund. For many people, registered retirement plans may be their single biggest assets beyond their homes.

Gifts of RSPs and RIFs

If you list the University of Calgary as the beneficiary of the proceeds of your retirement savings plan (RSP) or retirement income fund (RIF), there will be a charitable tax receipt issued for the value of the fund, offsetting the taxes owing on the proceeds.

If the beneficiary is other than a surviving spouse or dependant — a niece or nephew, for example — the value of the RSP will be taxed as ordinary income in the year of death.

Gifts of RSPs and RIFs fall outside your estate and therefore are not subject to probate — the process of establishing the validity of a will.

Gifts of Canada Pension assets

You may also use funds from your Canada Pension Plan (CPP) to make a charitable donation. When you receive your CPP payment, simply send the University of Calgary a cheque for the full or partial amount of what you received. You will get a tax receipt for the value of your cash gift.

As you consider a gift to the University of Calgary from your retirement funds, we can work with you and your advisors to identify and document a specific arrangement that works for you. Please contact us for more information or to arrange an appointment at your convenience.

Example: Retirement assets
 

Pension

Valerie has a new job and on her first day of work she’s filling out forms for the pension plan and names the University of Calgary as beneficiary. This means that, when she dies, her remaining pension will transfer to UCalgary and her estate will get a tax receipt that can be used to offset any income tax owing.

RSP/RIF Funds

Amadeo wants to leave his RSP to the University of Calgary, so he gets a Change of Beneficiary form and names “University of Calgary” as beneficiary. Some providers require a letter of direction.

His family is already provided for and Amadeo knows he can pass these registered assets to only his spouse, dependent children or charities without incurring taxes. In the case of a charity, this is because the corresponding tax receipt offsets the taxes due.

For most Canadians, RSP/RIF withdrawals are taxed at 30 to 40 per cent, but after death the entire remaining value of the RSP or RIF is included as income for tax purposes.

By donating his RSP proceeds to the University of Calgary, Amadeo reduced the administrative duties of his executor and avoided probate and estate fees because these assets fall outside of the estate. He also prevented any potential contests of his will by unsatisfied heirs and allowed for a quick settlement of his affairs.