➜The ONE Thing: Your RRSP Isn’t Worth Half What You Think

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The ONE Idea

What if we told you that your RRSP or RRIF—the retirement account you’ve spent decades building—might be worth half of what you think? For many high-income Canadians, up to 53.53% of registered funds can be taxed away at death, meaning a $2 million RRSP could leave your family with less than $1 million.

The good news is that with smart charitable planning—using tools like Donor Advised Funds, strategic withdrawals, and tax-efficient life insurance—you can redirect those taxes into a meaningful legacy instead. Rather than losing that wealth to CRA, you can turn it into a lasting impact for your family and the charities you care about most.

How It Works

Step 1 — Understand the Problem

RRSPs and RRIFs are taxed as income upon death which makes them fully taxable. Up to 53.53% of your registered savings could go straight to CRA.

Step 2 — Donate Registered Funds During Your Lifetime

You can donate some or all of your RRSP/RRIF now or at death to a Donor Advised Fund (DAF), private foundation, or charity. When you donate those same dollars, you receive charitable tax credits that offset most of that tax. Instead of it costing you 53.53% to withdraw, it only costs you 3.5%!

Step 3 — CRA Waives the Upfront Withholding Tax

Generally, when you withdraw money from an RRSP or RRIF, the financial institution is required to hold back a percentage and send it directly to the CRA as a prepayment of the tax you will eventually owe. In this case, however, CRA allows you to transfer the full amount without the usual 30% withholding tax deduction. This means the entire balance can move directly into a charitable structure.

Step 4 — Multiply the Impact Using Life Insurance

The donated RRSP dollars can be used to fund a life insurance policy owned by the charity or DAF. The death benefit can be anywhere from 5-20 times greater than the RRSP value. This causes your donation to multiply 5–20 times, all tax-free! In addition, the life insurance can build cash surrender value (CSV), a growing pool of money inside the policy. This can be used as a vehicle to donate throughout one’s lifetime.

Case Study: Adam Saved and Gave Big

Adam W., a 70-year-old married business owner, held $2 million in RRSPs. Without planning, more than half would have gone to CRA at death. Instead, here’s what he did:

• Donated the $2M RRSP to a Donor Advised Fund, with CRA waiving the withholding tax so the full amount transferred. After tax credits, his net cost was approximately $70,000.

• Used half the funds to pay for a 10-pay joint last-to-die life insurance policy, funded at $100,000 per year for 10 years for a total of $1M.

• Created a $3.5 million tax-free gift to charity at life expectancy—in addition to the $1 million left in his donated RRSP.

• Built accessible value along the way, as the policy accumulates cash surrender value that can be leveraged to support additional charitable giving during his lifetime.

Without this plan, the charity would have received nothing—and more than half the RRSP would have been lost to taxes.

The Bottom Line

Registered assets don’t have to be a tax trap. With a strategic plan, you can reclaim that wealth, use it to fund your values, and leave a legacy far greater than what’s on paper. It’s not about giving it all away—it’s about giving with plan and getting more back.

Imagine finding out your wealth is worth more than you thought… because you gave it time.

Want to find your legacy?

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