Pensions and RRSPs when you separate

Retirement savings are often the largest asset after the home, and they are handled differently from a bank account.

Pensions

The portion of a pension earned during the marriage forms part of net family property. Ontario has a standardised process: the plan administrator provides a Family Law Value on application, which avoids the cost of a private actuarial valuation in most cases. Up to 50 percent of the value accrued during the marriage can generally be transferred to the other spouse.

RRSPs

RRSPs are included at their value on the date of separation — but before tax. A hundred thousand dollars in an RRSP is not equivalent to a hundred thousand in a savings account, because it will be taxed on withdrawal. Notional tax should be accounted for, and failing to do so is a common and expensive oversight.

Transfers

A transfer between spouses under a written separation agreement or court order can be made on a tax-deferred basis using the proper form. Withdrawing funds and handing over cash instead triggers tax that need not have been paid.