ALTERNA BANK change 25$ fee when you withdraw from RRSP account! | Alterna Bank | Discussion forum

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ALTERNA BANK change 25$ fee when you withdraw from RRSP account!
December 4, 2023
9:57 am
RYAN
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I called the bank three times to withdraw money from my RRSP account. Every time the phone dropped off shortly after connection , my worst telephone banking experience with any banks. When I finally talked to a lady and was told a 25$ fee when you withdraw from RRSP account. I have never heard of this fee from any other banks. So I decided not to withdraw my RRSP and will transfer all RRSP out when GIC mature next year.

December 4, 2023
10:03 am
MG
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Hi Ryan, there is usually a fee of $50 + HST to withdraw from a Big Bank RRSP. Don't forget that the financial institution needs to register the withdrawal with the government and withhold minimum tax so there is effort involved.

December 4, 2023
10:03 am
Bill
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Before you do business with a bank always a good idea to check their fees page if fees are a factor in your banking.
https://www.alternabank.ca/en/legal/service-fees

December 4, 2023
10:17 am
RYAN
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MG said
Hi Ryan, there is usually a fee of $50 + HST to withdraw from a Big Bank RRSP. Don't forget that the financial institution needs to register the withdrawal with the government and withhold minimum tax so there is effort involved.  

Well, I know there is 10% withholding tax withdraw under 5000$. I withdrew RRSP many times from my Tangerine account and was never charged a fee.

December 4, 2023
10:22 am
Itellyouwutt
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Ryan: I'm definitely not defending bank fees -- especially for clerical functions that require 60 seconds of data entry (maybe less).

But pretty much every bank and credit unions charges something to withdraw from an RRSP. I think the only one that doesn't (that I know of) is Oaken.

So by all means, transfer your RRSP out if that's what you want. But just don't assume that the next bank or credit union will be any better.

Also, check for RRSP transfer out fees. You may be in for an unpleasant surprise later on if Alterna hits you with one of those. If so, then the receiving bank or credit union may reimburse some or all of the fee. For example, Meridian will reimburse up to $50 for each incoming registered funds transfer.

December 4, 2023
11:53 am
savemoresaveoften
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RYAN said

Well, I know there is 10% withholding tax withdraw under 5000$. I withdrew RRSP many times from my Tangerine account and was never charged a fee.  

not sure about Tangerine but all other banks charge a fixed admin fee ($50) everytime one withdraws from RRSP account. I know RESP has no fee tho.

the Tangerine registered savings account may be an exception, but then they only pay u 0.7% interest....

December 4, 2023
2:23 pm
Dean
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.
Up until recently, even TD Direct Investing had a $25 fee (+ Tax) for RRSP withdrawals.

Unfortunately, it's close to being an industry standard these days, with very few exceptions.

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

December 4, 2023
2:31 pm
Alexandre
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Is everyone sure they don't mix "RRSP transfer fee" with "RRSP withdrawal fee?"

Transferring RRSP to another bank often has fee associated, but this is news for me that FI could charge fee (separate from government withholding tax) for me to move my money from RRSP Savings account to non-registered Savings account with that same bank.

December 4, 2023
2:40 pm
AltaRed
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The few fee schedules I have seen have fees for both, i.e. a transfer to another FI and for a withdrawal within one's own FI. It still has to be processed, recorded and eventually reported to CRA.

The purpose of a RRSP, after all, is a retirement plan that is left alone until one is retired and have it all morphed into a RRIF for annual withdrawals under that mechanism.

December 4, 2023
4:31 pm
Alexandre
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I checked all banks I have RRSP with, not one of them has fee for RRSP withdrawal. I must be lucky. I intend to keep it that way now that I am told this fee is common.

For me RRSP is a tool to reduce my income tax rate in years when it is high, and source of funds in years when my income tax rate will be low. That might not be government intended purpose of RRSP, but at the end our aim is to maximize our own net worth.

December 4, 2023
6:03 pm
Briguy
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Achieva, Hubert, Peoples Trust and Oaken are well known by this forum not to charge for registered plan withdrawals so I'm sure none of them charge for partial withdrawals on RRSPs.

Suprisingly, it looks like you can still open a Hubert account. ( I checked on the Hubert website and there is an option to open an account. )

December 5, 2023
7:37 am
RYAN
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Alexandre said
Is everyone sure they don't mix "RRSP transfer fee" with "RRSP withdrawal fee?"

Transferring RRSP to another bank often has fee associated, but this is news for me that FI could charge fee (separate from government withholding tax) for me to move my money from RRSP Savings account to non-registered Savings account with that same bank.  

The 25$ fee is called "RSP Withdrawal" not a RSP transfer fee which is 125$. Alterna Bank has a 4 pages fee schedule beside its poor service. So stay from Alterna Bank. I will move all my money out of it.

December 5, 2023
11:36 am
Oscar
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Transferring out to another institution might not stop the fee from being charged as the new institution could introduce the fee at any time, and it could be more than $25 and then you would in the same situation again and you would be out the $125 transfer fee unless the new institution covers it. My advice would be to compare interest rates and then factor in the withdrawal fee to determine where you would come out ahead. Alterna Bank is on the GIC chart and is competitive and is generally no fee for daily banking so I would think twice about breaking up with them about this fee alone.
Another strategy would be to do a partial transfer (enough to cover the next 5 years or whatever time frame that works for you) of your RRSP to another institution where withdrawals are free (and interest rates are higher) and leave the rest where they are.

December 5, 2023
12:03 pm
Itellyouwutt
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Everyone has to do their own thing. But I'm with Oscar on this. Look at the big picture and realize that even if you go the DIY route (as many of us wisely do) there are always going to be costs of doing business. Naturally, we want to minimize those costs -- ideally even eliminate a few. But there are always going to be costs.

Ryan has his own framework, but personally a $25 RRSP withdrawal fee or $125 RRSP transfer fee aren't enough, on their own, to make me kick an FI off the roster. If it's one of several reasons, then it could be the tipping point. But not on its own.

Again though, everyone has to do their own thing.

PS Ryan -- if you really want to feel some pain (not that your a masochist but it's kind of like eating one of those punitively hot chilis) then check out the service fees that Luminus Credit Union charges. Sit down first, because you might pass out.

December 5, 2023
12:34 pm
Alexandre
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RYAN said

The 25$ fee is called "RSP Withdrawal" not a RSP transfer fee which is 125$. Alterna Bank has a 4 pages fee schedule beside its poor service. So stay from Alterna Bank. I will move all my money out of it.  

Thanks for bringing attention to this. I do come to this Web site not just to check for interest rates, but for info like this.
If I were getting RRSP Withdrawal fee from FI, I would have moved all my funds out of that FI, just to send the message to FI.

What's next? Justification of TFSA withdrawal fee? Non-registered Savings account withdrawal fee?

December 5, 2023
1:13 pm
RYAN
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Alexandre said

Thanks for bringing attention to this. I do come to this Web site not just to check for interest rates, but for info like this.
If I were getting RRSP Withdrawal fee from FI, I would have moved all my funds out of that FI, just to send the message to FI.

What's next? Justification of TFSA withdrawal fee? Non-registered Savings account withdrawal fee?  

True. Alterna Bank can claim "no banking fees" but has 4 pages other fees which are among the highest.

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