Guarantees regular payments for life when required.
How it works
Advanced life deferred annuity (ALDA) is a tax-efficient product for individuals wishing to defer the taxation of their registered savings (RRSP, RRIF and DPSP) as late as possible. This is the only product that delays the start of payments from registered funds made to the end of the year in which the annuitant turns 85.
The ALDA must be acquired with unlocked registered funds. Transfer from an RRSP must happen before December 31 of the year in which the annuitant turns 71. Transfer from a RRIF may occur up to age 80. This will avoid the need to make minimum withdrawals on this portion of the capital between the year of the annuitant’s 72 birthday and the year of their 84 birthday.
The payment amount is set at the time of purchase of the annuity and will not be affected by market fluctuations.
All payments received in one year are taxable to the annuitant.
Benefits
- Guaranteed periodic payments for life, after a deferral period
- Protected from market fluctuations
- Defer the payment when required by the client
- No management required
Safety and peace of mind
- Don’t outlive your savings: Protect yourself against longevity risk
- Earn lifetime guaranteed income in the absence of an employer pension fund
- Have funds to cover essential living expenses, non‑essential expenses (maintain a standard of living like going to a restaurant) or increased expenses at the end of life (e.g. health care)
- Have a steady and stable income in the later years (financial autonomy)
- Make budgeting and money management easier (protected from market fluctuations)
Taxation
- Delay the taxation of registered income for as long as possible
- Reduce the minimum required RRIF withdrawals between the years of the annuitant’s 72 and 84 birthdays and defer the associated taxes
Main features
Deferral period
Payments can begin no later than the end of the year in which the annuitant turns 85.
Joint and survivor annuity
If this option is chosen, upon the death of the annuitant, the entire pension will continue to be paid to his or her spouse until the latter’s death.
Cash refund
Upon the death of the annuitant and joint annuitant (if applicable), the beneficiary will receive the difference between the single premium paid by the annuitant to purchase the annuity and the total payments received by the annuitant up to the date of death.
Source of the single premium
Registered funds
Minimum premium
$5,000
Overall limits for ALDA (lifetime limit)
-
Transfer limits from transferor plans (RRSP, RRIF, DPSP)
25% of the value of all assets in the transferor plan at the end of the previous year. If there have already been transfers (in the current or a previous year) from the transferor plan under an ALDA contract, the transfer limit is reduced. -
Overall limit
For 2024, the overall lifetime limit is $170,000 on all transfers. The limit is indexed to inflation (rounded to the nearest multiple of $10,000).
Both limits must be met.
There is a tax of 1% per month on the cumulative excess amount.
Age limits
The ALDA contract must be acquired before December 31 of the year in which the annuitant turns 71 (except for a transfer from a RRIF which may be later).
- Minimum age: 55
- Maximum age: 80
Annuity payment
- By direct deposit or cheque
- Monthly, quarterly, semi-annually or annually
- Withholding tax is mandatory
End of annuity payments
Upon the annuitant’s death*
* May vary depending on the options chosen (reversibility)
Deferral period
- Minimum 5 years
- Maximum 30 years
- The annuity must begin no later than the end of the year in which the annuitant turns 85
Changes
No changes permitted
Surrender
Non-redeemable
Taxation
All the payments received are taxable.
