Pension transfer out—Transfer process
After you have reviewed your Appendix B/B2—Request for transfer of service credits form - and carefully considered all the relevant issues surrounding your pension portability options, you must return the form to your current employer clearly indicating your option by checking off the appropriate section. If you proceed with the transfer, you will cease to be entitled to any benefits under the Public Service Supperannuation Act (PSSA).
It is important to note there is a time limit to make your decision and return the Appendix-B/B2 to your current employer. If you do not return this appendix within the deadlines indicated on the form, you risk losing the opportunity to transfer. Delays may result in significant changes to the federal and/or employer transfer amounts. These changes are a direct result of variations in actuarial assumptions and the accumulation of interest.
If you proceed with the transfer, your current employer will advise the Government of Canada Pension Centre of your decision, provide an updated employer transfer amount and make a request for payment. The Government of Canada Pension Centre will then forward the lesser of the federal transfer amount or the employer transfer amount to your current employer.
Upon receipt of the payment, your current employer will advise you of the amount that was transferred on your behalf and the credited service purchased by the transferred amount. They will also advise you if there is an opportunity to purchase any remaining service that was not credited by the transfer.
What happens if the amount available for transfer is more than the amount required?
If the federal transfer amount is greater than the employer transfer amount, but less than the amount of transfer value benefit payable under the PSSA, the difference between the transfer value and the employer transfer amount is payable to you. This amount is payable whether or not you would be entitled to a transfer value benefit under the PSSA and is called a "transfer value guarantee".
The Income Tax Act (ITA) places certain limits on the amount of pension benefit that can be transferred on a tax-sheltered basis to a registered pension vehicle. If any of the excess funds available are within the tax limits prescribed by the ITA, these funds must be transferred to a locked-in registered retirement savings plan (RRSP). No T4A (or Relevé 2) will be issued for this portion of the payment and your financial institution should not issue a tax receipt.
Any funds in excess of the ITA limits are payable to you in cash with taxes taken at source. A T4A (and Relevé 2, if applicable) is issued for this portion of the payment. However, if you have available Registered retirement savings plan (RRSP) room, you may wish to transfer these funds to an RRSP. The transfer of these funds is not subject to the lock-in provision. A T4A (and Relevé 2, if applicable) is issued indicating the amount paid but no tax is deducted. It is your responsibility to contact the Canada Revenue Agency (CRA) to find out if you have sufficient RRSP room to accommodate the transfer. For information regarding your situation you may contact your local Canada Revenue Agency office. You may also consult their Tax information phone service (T.I.P.S.) at 1-800-267-6999.
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