In Canada, you can transfer money to and from your retirement accounts without any penalties. To do this, you will need the form T2151 to initiate and complete the process. This means that you can transfer money from a Deferred Profit Sharing Plan (DPSP) or a Registered Pension Plan (RPP) to other savings or retirement plans. In this article, we will be overviewing the T2151 form.
What is Form T2151?
The form T2151 (Direct Transfer of a Single Account) is a form that allows taxpayers the freedom to transfer money from one retirement savings account to another. You can either transfer from a DPSP or an RPP.
You can only transfer from an RPP if you are a member of the RPP or if you are a spouse or common-law partner and your partner has died, or the relationship is broken. For DPSP, a transfer is allowed if you are a current or former employee with DPSP beneficiaries.
Spouses (both current and existing) and common-law partners can also request a transfer in case of death if they are designated beneficiaries. You and your spouse may be sharing a retirement plan, and should one of you die, the other person can request a transfer to his/her individual retirement savings account.
You can choose to leave the account open after the transferor decides to transfer all pension income into another account. There are no fees on the transfer; it is done on a tax-deferred basis. This means that you will still pay tax on the money when you get the benefit.
Accounts Transferable
Below are some of the accounts you can transfer the money from a DPSR or an RPP to:
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Registered Pension Plan (RPP)
- Deferred Profit Sharing Plan (DPSP)
- Specified Pension Plan
Sections in the T2125 Form
The form has three significant sections dedicated to serving different purposes, they include;
1. Applicant
In this section, you are required to enter your details. This information includes
- Name
- Address
- Social insurance number (SIN)
- Telephone number.
This section also has four parts (A-D). Depending on the retirement savings account you are transferring from, you won’t need to fill all parts. If you are transferring money from a DPSP, you will need to fill parts A, C and D.
If you are transferring from an RPP, you will need to fill parts B, C and D. You will also need to provide your RRP or DPSP number, your employer’s name and address in this section.
2. Transferor’s Certification
This section is for the person transferring the money. It is to certify the total amount of the money transferred from either an RPP or DPSP.
3. Transferee’s Certification
This section is required for the person, or retirement savings account you are transferring money to.
When To Fill The T2151 Form
You can do transfers at any time so long as you need to, but if you are 71 years old by the time of year you want to make the transfer, it is not allowed. If you have more than one retirement savings plan before you retire, you will need to fill the T2151 form to merge the plans into one.
Also, if you leave a job to another, you may need to transfer money from your retirement plan connected to your former position to the new one, and for that, you will need to fill the T2151.
If you or your spouse should pass on or get a divorce, you will need to fill the form to transfer the money in a retirement plan to another account or an individual account if you both shared one retirement savings plan before the death or divorce.
How To Get The T2151 Form
The form is available on the Canada Revenue Agency (CRA) website, and you can download the PDF form and print it or use the PDF fillable version. You can also fill the form online.
Note that the form is not sent directly to the CRA. You must also have a registered RPP or DPSP account number and transferable amount to get the form.
How to Fill the T2151 Form
Once you get the form, you will need to get documentation of the account you are transferring from to the account you are moving to from your past and current employers. You will then fill the form as described earlier.
You are required to fill four identical slips and give one to your pension plan administrator. The financial institution that holds your retirement savings account will also receive a copy of your transferring institution’s form. So, there is no need to inform them unless you are required to.
Once the transfer has been made, you should confirm from the receiving financial institution to know if they have received the money. Then, the process is complete. However, some deductions and limits may affect the amount you can transfer. Therefore, you should consult with an expert to know more about this.
T2151 and T2033
The T2151 and the T2033 share the same function – transferring money from one retirement savings plan to another, but they differ in the type of accounts transfers can be made to and fro. While the T2152 allows transfers from an RRP or a DPSP to other types of accounts as listed above. The CRA issues both forms, and it is used to complete the annual tax return.
The T2033 only allows transfers between RRSP, RRIF, SSP and PRPP accounts. You can as well transfer from the accounts mentioned above to your RRP.
It has four sections, unlike the T2125 form with three. If you want to make transfers, it will be necessary to identify the accounts you are transferring from and know which one of the two forms fits the transfer.
Conclusion
The T2151 is a form that allows you to transfer lump sum from either your RRP or DPSP to eligible accounts like the RRIF, SSP and RRSP. It is not sent to the CRA, although it is obtainable from their website.
It allows you to merge your retirement savings plans, thereby benefitting from lower fees you will need to run one account rather than the huge cost of managing multiple accounts.
You or your spouse or common-law partner can also make transfers in case of a separation, divorce or death. The T2151 is also similar to the T2033 but differs in a few ways.
