There are two occasions when you will be asked to name a beneficiary for your account:
You may name either a person(s) or your estate as beneficiary. Your beneficiary can be changed at any time by notifying SPP in writing.
There are several factors to consider when naming a beneficiary.
Withholding tax is determined using a schedule prescribed by Canada Revenue Agency (CRA).
|Account Balance||Rate of Tax Withheld|
|$5,000 or less||10%|
|$5,001 - $15,000||20%|
|$15,001 and over||30%|
For example, if your account balance is $5,500 when you die and your beneficiary chooses to receive the payment directly, he or she will receive $4,400, and $1,100 of withholding tax will be sent to CRA. The beneficiary will receive a T4A to file with his or her income tax return and may be eligible for a refund of all or part of the tax paid.
|Where one beneficiary is named:||Mary Jane Smith, my wife|
|Where more than one beneficiary is named:||Sarah Louise Smith, my mother and Robert Gordon Smith, my father, equally or to the survivor.|
|Where beneficiaries are allowed fractional amount(s):||Mary Jane Smith, my wife, two-thirds; William John Smith, my son, one-third. The share of a deceased beneficiary shall be paid to the survivor.|
|Where an alternative beneficiary is named:||Mary Jane Smith, my wife, if living, otherwise to William John Smith, my son.|
|Where an minor is named as beneficiary:||Mary Jane Smith in trust for William John Smith, my son.|