Franco is retiring from his job as a high school principal at the end of...

Franco should transfer the funds to his own RRSP and maintain the tax-deferred accumulation until the statutory RRSP maturity deadline, then convert the account to a RRIF.

Franco is 66. An RRSP must mature no later than the end of the calendar year in which its annuitant reaches age 71. CRA therefore allows approximately another five years of RRSP tax deferral before Franco must withdraw the funds, purchase an eligible annuity, or transfer them to a Registered Retirement Income Fund.

Because he does not currently require income, immediate RRIF withdrawals would unnecessarily accelerate taxable retirement income. However, option B cannot be maintained until his wife retires in 10 years: Franco would then be approximately 76, well beyond the age at which his RRSP must mature.

A direct transfer to a spousal RRSP is not the appropriate mechanism for moving his existing group RRSP retirement assets. Leaving the funds indefinitely in the group arrangement also fails to recognize the age-71 maturity requirement.

Option C precisely matches the available time horizon: preserve RRSP tax deferral for about five years, then establish a RRIF.

FPII reference/topic: Retirement Planning — group RRSPs; RRSP maturity; age 71 conversion requirements; RRIF planning.

===============