2015-0573331C6 Documentation re qualifying transfers to IPPs

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Request for the Registered Plans Directorate (RPD) to provide a status update on issue identified in its November 2014 RPP Practitioner's Forum regarding cases of non-compliance with the rules governing qualifying transfers to individual pension plans (IPP) from registered retirement savings plans. In particular, RPD advised that in some cases the transfers were never completed as required (or only partially completed) and lump sum contributions were made instead for which business deductions were taken. The Director of Compliance had suggested that additional documentation may need to be provided to the CRA to ensure compliance. CLHIA is now asking for an update on what was discussed at the November 2014 forum.

Position: RPD will chair an ad-hoc committee comprising a small number of representatives from RPD and industry who specialize in IPPs to further explore options for how to best provide evidence to the CRA of the qualifying transfer. RPD confirmed that it has not recommended the creation of a new form, and will consult with stakeholders on any options explored in future.

Reasons: See below.

Author: Ward, Jason

Section: ITR 8304(10)

CLHIA Roundtable – May 14, 2015

Question 6 – Documentation Supporting Qualifying Transfers to Individual Pension Plans.

At a Registered Plans Directorate conference in November 2014, CRA officials discussed possible enhanced transfer documentation/source reporting to be provided by RRSP administrators where funds are purported to be transferred from an RRSP to an Individual Pension Plan (IPP). It was suggested that an expanded, prescribed, use of form T2033 might be appropriate.

It appears that, in the offending cases, such amounts are actually new contributions by the employer, and not amounts transferred from other registered plans.  Imposing enhanced transfer requirements on RRSP administrators would not appear to resolve such fraudulent activity, and more rigorous documentation requirements for recipient IPPs only would appear to be required.

In many cases, the T2033 is no longer a prescribed form, and has been replaced by a standardized "Transfer Authorization for Registered Investments" (TARI) developed by the financial services industry's associations.  As such, the industry has requested that any proposed changes to the T2033 where that form is not prescribed be shared with the industry on a draft basis, to ensure comparability of documentation between the T2033 and the TARI.

Can the Agency advise the industry of the status of both the IPP issue and any new documentation initiatives?

CRA Response

As promised at the November 2014 RPP Practitioner’s Forum, the Registered Plans Directorate (RPD) will chair an informal ad-hoc committee in 2015 comprised of a small number of representatives from RPD and industry representatives who specialize in individual pension plans (IPPs).  For future cases where IPPs recognize past service and purport to have qualifying transfers from RRSP/RRIF or money purchase (MP) plans, the committee will explore options for how best to provide evidence of the qualifying transfer (i.e. transferred from a RRSP/RRIF/MP source and within prescribed deadlines).

RPD has not indicated that it would like to resurrect form T2033 or create a new prescribed form for this purpose.  In any event, RPD will consult with the CLHIA (and other associations), where appropriate, on any options being explored that might vary from the current TARI form being used by financial institutions or that otherwise create enhanced reporting requirements for transfers.

Prepared by: Andrew Donelle, Director – Compliance, Registered Plans Directorate

Jason R. Ward

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