Everything You Need to Know About the T2151

If you are looking to transfer money from one of your retirement pension plans to another, the Canada Revenue Agency (CRA) expects you to complete form T2151. No penalties or fees are imposed on transfers between retirement plans. You can freely move money from a deferred profit sharing plan (DPSP) or a registered pension plan (RPP) to various savings plans that we'll discuss below. Here's a quick overview of the form, including how it relates to T2033 and the calculations required when filling out both forms.

What is the T2151?

Form T2151, also known as the Direct Transfer of a Single Amount, allows taxpayers to transfer their money from one retirement savings account to another. You can transfer money between an RPP and a DPSP. The amounts in these two plans are also transferable to RRSPs (Registered Retirement Savings Plans), RRIFs (Registered Retirement Income Funds), and SPPs (Specified Pension Plans). Form T2151 features three main sections:

1. Applicant

Known as Section I, this is where you enter your name, address, social insurance number, and telephone number. It also features four parts, A through D. Taxpayers transferring from an RPP should complete parts B, C, and D. Those transferring from a DPSP need to fill out parts A, C, and D. You can transfer money from a DPSP account if you are a current or former employee with DPSP beneficiaries.

Spouses or common-law partners and former spouse or common-law partner beneficiaries can also request transfer following the death of the employee or when the marriage (or partnership) breaks down. Make sure you check the appropriate boxes. Transfers from an RPP are only allowed if you are a member (of the RPP) or if you are the current or former spouse/common-law partner beneficiary, and your partner has died, or the relationship is broken.

Essentially, if you share a retirement plan with your partner, you can request a transfer to an individual retirement savings plan in the case of death or separation. You must also provide your RPP/DPSP number and the employer's name and address. Part C describes the amount to be transferred and you are allowed to either transfer the whole amount in the plan or specify the portion you want to be moved. Part D lists the accounts you can transfer to (RRSP, RPP, DPSP, RRIF, PRPP).

2. Transferor's Certification

As the name suggests, this section is for the person transferring the savings and is a certification that confirms the amount transferred from a DPSP or an RPP. This section features various checkboxes with straightforward descriptions. Essentially, you will specify the total amount transferred, subsection, and act.

3. Transferee's Certification

This is the last part of the form and is for the transferees or retirement savings plans receiving the transfer. Part D of Section I should help you complete this section, which acknowledges the received money.

T2151 vs. T2033

T2151 and T2033 forms are both used when reporting transfers between registered pension plans. These forms are provided by the CRA and used to complete the annual return. T2151 is for the direct transfer of a single amount (lump sum). T2033 is also a direct transfer slip, albeit under different subsections. T2033 is used for transfers between RRSP, RRIF, SSP, and PRPP accounts. You can also transfer money from these plans to your registered pension plan. The form is a bit similar to T2151, but has four sections, making it a bit longer.

If you are considering transferring funds from your pension plan, it is essential to determine which CRA forms to fill out and these two (T2151 and T2033) are the vital slips to track. Various reasons merit transferring funds from one savings plan to another. For instance, you might have multiple savings plans leading to retirement and choose to consolidate your funds into one account. You may also transfer funds to benefit from lower fees. Other reasons include the death of a spouse or common-law partner or divorce. The CRA also allows you to transfer funds if you get a new employer with unique pension plans of their own.

How do I calculate the total amount of transferred funds for the T2151 and T2033?

Calculating the amount transferred should be an effortless task. You can move all funds in the pension account and close or leave it open. However, you cannot transfer more than you have in the transferor's account. There's also a lock-in provision that applies to specific transfers. Forms T2151 and 2033 are unusual, so it is recommended to use tax preparer services. Essentially, you will need to determine the amount sent to the new pension plan and add other withheld fees and provisions.

For starters, you need documentation on both accounts (transferor and transferee) provided by your current and past employers. Your pension plan administrator will also get one of the four identical slips you must fill out. Pension plans are savings and benefits combined and you should be able to transfer all funds in any of your accounts. However, there are various deductions and it is advisable to consult a trusted tax preparer or use tax software.

How do I obtain a T2151?

Forms T2151 and T2033 are available online through the CRA website. You can log in to the CRA's "My Account" and navigate to your tax slips or use the convenient search bar to locate your forms. These forms aren't usually sent directly to the CRA offices. However, both are available for online filling, so you can easily fill out and submit your slip through the CRA website. You can also download and print a fillable PDF version for manual filing and mailing.

To obtain either form, you must have a CRA-registered RPP or DPSP account number and transferable amounts. Transfers are restricted to the plans mentioned above. T2151 and T2033 forms from the CRA come with limited guidance on how to complete them, explaining the preference for tax services. You can get the same form from your tax software, which comes with simplified descriptions to help you understand how to complete calculations and fill in the required information.