Optimize Elections to Split Income by September 30

Did you know you can go back 3 years to optimize pension income splitting?  You have up to three years to elect to split pension income, or to amend an election.  With the effective due date for the 2019 return being September 30, 2020, one might think that the 2016 election could be amended up to the end of September 2020, but that’s not the case.  Changes to the 2016 election had to be made by May 2, 2020 (three years after the due date for the 2016 return).  However, changes to the election for 2017, 2018, and 2019 may still be made.

What Do You Need to Know?

• The spouse with whom elected pension income is split (on Form T1032 Joint Election to Split Pension Income) reports the income on this line.
• Pension reported on line 11500 is eligible for the pension income amount.  This will include PRPP income.
• The maximum amount that can be split is 50% of the eligible pension income received by the transferor.
• In a year of marital change, the maximum is prorated for the number of months the couple was married to the number of months in the taxpayer’s year.  Thus, in the year of death, there is no proration of amounts received by the deceased but there is for the survivor.
• If income tax has been withheld on the pension income, the credit for the tax is split as well.
• The deadline for filing the election is the due date for filing the return. However, late and amended elections will be accepted for until three years after the due date for filing the return for the year.
• Splitting eligible pension income involves balance potentially conflicting effects:

Additional educational resources: Highly qualified retirement income planning specialists can help.  Earn your credentials by taking the new Personal Pension Planning course in the MFA™- Pension & Estate Services Specialist Designation program.

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