When Did You Last Review Your Registered Plan Beneficiaries?

Beneficiary designations are often overlooked after accounts are opened, but they can significantly affect the efficiency, tax implications, and distributions of your assets. Reviewing them regularly helps ensure they still align with your goals.

Why Name a Beneficiary?

Designating a beneficiary for registered plans (such as Registered Retirement Savings Plans, Registered Retirement Income Funds, and Tax-Free Savings Accounts) offers several benefits:

1. Ease of transfer — Plan assets can bypass the probate process, which speeds up distribution.

2. Reduced estate costs — May reduce probate or estate administration fees (depending on jurisdiction).

3. Flexibility — Beneficiaries don’t need to match those in your Will.

Tax Considerations

Naming certain beneficiaries can defer or reduce taxes on registered plans:

• Tax deferral applies when the RRSP/RRIF beneficiary is the spouse/common-law partner, financially dependent (grand)child under the age of 18, or financially dependent mentally or physically infirm (grand)child of any age.
• Tax minimization may apply if a registered charity is named, creating a charitable tax credit.

“Successor” vs. “Beneficiary” Designation

For RRIFs and TFSAs, naming a spouse/partner as a successor instead of a beneficiary can offer smoother transitions.

RRIF successor annuitant — The spouse continues the RRIF without interruption and can transfer the RRIF to their own RRIF (or RRSP if not yet 71).

TFSA successor holder — Income earned in the TFSA continues to be tax-free. The successor can operate the account into the future, but new contributions are subject to their own TFSA contribution room.

Three Common Mistakes

1. Misalignment with estate plan – Your designations should reflect your overall estate plan. If you have multiple beneficiaries, maintain detailed records and seek legal/tax advice to understand how taxes may impact each heir.

2. Outdated designations – Major life events—like death or divorce—can affect your choices. Review designations regularly.

3. Incorrect use of “beneficiary” vs. “successor” – This can lead to administrative complications or tax consequences (for instance, in the case of TFSAs).

Take Time to Review

If you haven’t reviewed your beneficiary designations recently, now is a great time. Please get in touch, and always consult legal and tax professionals to ensure your designations support your broader estate planning goals.

The content in this article is for information purposes only and does not constitute tax or legal advice. It is imperative that you obtain professional advice from qualified tax and legal advisors before acting on any of the information in this article. This will ensure that your own circumstances are properly considered and that action is taken based on the most current legislation. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada.  / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © RBC Dominion Securities Inc. 2025. All rights reserved.