Sarah and Mark are married. Sarah, age 70, passes away, leaving her $500,000 RRSP to Mark, age 68, as direct beneficiary. Mark decides to immediately transfer the full amount to his own RRSP. What is the immediate tax consequence for Sarah's estate or Mark related to this transfer?

Question: Sarah and Mark are married. Sarah, age 70, passes away, leaving her $500,000 RRSP to Mark, age 68, as direct beneficiary. Mark decides to immediately transfer the full amount to his own RRSP. What is the immediate tax consequence for Sarah's estate or Mark related to this transfer?

Answer options: ✅ No immediate tax consequence.

• Sarah's estate will pay tax on the full $500,000.
• Mark will pay tax on the full $500,000.
• Mark will pay 50% tax on the $500,000.

Correct answer: No immediate tax consequence.

Explanation: When an RRSP balance is transferred to a surviving spouse or common-law partner's RRSP (or RRIF/annuity) via a direct beneficiary designation or through the will, a spousal rollover applies under subsection 146(8.1) of the Income Tax Act, deferring the tax consequences until the surviving spouse withdraws the funds.