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RSP GIC does not mature until I am 73
May 20, 2024
5:42 am
dommm
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I have a 5yr GIC held in an RSP account. This RSP account only holds this GIC & nothing else. This GIC will not mature until I am 73yrs old. I know I need to convert RSP's to RIF's in my 71st year. I also know I will need to make a mandatory withdrawal before the end of my 72nd year. Since the GIC does not mature during my 72nd year & the RIF account will not hold any other investments how will I be able to make the mandatory withdrawal? Thanks

May 20, 2024
6:29 am
mordko
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My guess, for what it’s worth: the bank/broker would automatically redeem the amount you have to withdraw at no cost to you.

May 20, 2024
7:20 am
AltaRed
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It would help to know the FI in case a forum member knows specifically what that FI's policies are.

They can vary by FI and whether the product is in-house, such as a Scotia GIC in a Scotia RRSP, or whether it is a third party GIC in a brokerage account. For the former, Mordko is likely correct in that the GIC is under their own control.

May 20, 2024
8:58 am
Dean
Valhalla Mountains, British Columbia
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.
Dommm . . .

You can ask your question here and get All Sorts of Answers/Guesses,
or ... you can talk 'Directly' to the FI, and get the Full/Correct Scoop.

It's Your Call . . .

LOL sf-laugh

    Dean

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

May 20, 2024
9:46 am
BillieBob
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Many FI’s will make the minimum withdrawal even from locked-in GICs. I know that Hubert will.

May 20, 2024
10:11 am
Norman1
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That depends on how the RRSP and the RRIF are set up.

RRSP's and RRIF's can be set up as a depositary contract, as a trust, or as an insurance contract. The GIC's in a contract RRIF can have special fine print that allows early access to principal and even accrued interest for RRIF withdrawals. There would not be a problem after one converts the contract RRSP GIC to a contract RRIF GIC.

Not the case with a RRIF that is set up as a trust like the ones at brokerages. Those RRIF's hold GIC's that are non-registered. The registered status comes from the RRIF trust and not from the GIC's themselves which have no special fine print to allow early access to principal or accrued interest for RRIF withdrawals. RRIF trustee to-be could refuse to accept the transfer of such an RRSP unless the annuitant contributes some cash to the RRSP or transfers cash from another RRSP or RRIF to provide the liquidity needed for the first minimum RRIF withdrawal.

Some financial institutions, like ICICI Bank, don't do RRIF's. One is forced to break the RRSP GIC early with penalty and transfer to a RRIF elsewhere.

May 20, 2024
10:36 am
AltaRed
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I suspect in this particular instance, the FI will allow access to the required amounts to meet RRIF withdrawal requirements, because their software algorithm should not have allowed the purchase of a GIC of a term that exceeds the legislated life of the RRSP in the first place. As post #4 said, the OP needs to call their FI to resolve that potential conflict.

May 20, 2024
5:56 pm
SaverJunior
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dommm said
I have a 5yr GIC held in an RSP account. This RSP account only holds this GIC & nothing else. This GIC will not mature until I am 73yrs old... 

It sounds like you have more than one RSP account. As long as you can withdraw the minimum required RRIF amount each year from any RSP/RRIF account, you should be fine.

Unmatured RSPs can be contributed into a RRIF as is.

I don't think FIs would allow withdrawals from a locked GIC. If they do, you most likely would lose all accrued interests plus a penalty.

May 20, 2024
6:34 pm
dommm
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Dean said
.
Dommm . . .

You can ask your question here and get All Sorts of Answers/Guesses,
or ... you can talk 'Directly' to the FI, and get the Full/Correct Scoop.

It's Your Call . . .

LOL sf-laugh

    Dean

  

Thanks for your reply Dean but on more than one occasion the answers I received on this forum turned out to be correct when asking the same question to the FI was incorrect.

May 21, 2024
12:52 am
Loonie
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If you tell us which FI has your GIC, we might give a better answer.

That said, spouse and I had a few RSPs with GICs at various banks/CUs, and Indeed, they were almost too willing, they all were ready to automatically convert them to RIFs and then automatically make the required mandatory withdrawal and send it to CRA without any intervention from us. and at least one of them (Tangerine) did not appreciate our intention to direct the conversion ourselves.

My suggestion is to start this process early in the year in which you turn 71. Approach your FI and tell them you want to convert the RSP to RIF. If you take the initiative, you will be able to make the following choices: 1. whether to make the rates of mandatory withdrawals based on your own age or spouse's age; 2. choose when during the year, you want that withdrawal made; and 3. choose whether you want the mandatory withdrawals to start in the year you turn 71 or in the year you turn 72. Otherwise, the FI may make these decisions for you without discussing them.

May 21, 2024
6:35 am
BillieBob
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SaverJunior said

I don't think FIs would allow withdrawals from a locked GIC. If they do, you most likely would lose all accrued interests plus a penalty.  

Some FI’s do allow RIF withdrawals from locked-in term deposits. Hubert is one of them. Not only does Hubert allow minimum RIF withdrawals, they also allow ANY kind of withdrawal from a locked-in RIF term deposit with no fees or penalties.

Information about Hubert RIF withdrawals can be found in this thread.
https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/hubert-rif-withdrawals-qas/

May 21, 2024
7:31 am
Norman1
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SaverJunior said

It sounds like you have more than one RSP account. As long as you can withdraw the minimum required RRIF amount each year from any RSP/RRIF account, you should be fine.

Can't do that. Each RRIF has to pay out at least its minimum each year. That's what defines a RIF in Income Tax Act 146.3 (1):

Definitions

146.3 (1) In this section,

registered retirement income fund means a retirement income fund accepted by the Minister for registration for the purposes of this Act and registered under the Social Insurance Number of the first annuitant under the fund; (fonds enregistré de revenu de retraite)

retirement income fund means an arrangement between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant (and, where the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment. (fonds de revenu de retraite)

May 21, 2024
8:16 am
AltaRed
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Norman1 said
Can't do that. Each RRIF has to pay out at least its minimum each year. That's what defines a RIF in Income Tax Act 146.3 (1):  

This is yet another reason to have a single RRSP, and especially a RRIF, at a discount brokerage where one can manage all holdings, even if all GICs, as a holistic portfolio in one place. I get that one may not get an overall return as high as shopping the universe of FIs for best interest rates, but it is much easier to arrange maturities to match a RRIF withdrawal schedule in a far less laborious and high maintenance effort. One is also being far more kind to a POA and/or an Executor to manage as well, which will definitely occur at some point in one's life.

May 21, 2024
8:56 am
Dean
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.
... 'DITTO' To That ⬆

    Dean

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

May 22, 2024
5:05 pm
Loonie
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RIF at discount broker will work as long as you never want to withdraw beyond the mandatory amount. For partial withdrawals, you may incur a hefty fee. Best to ask before you move everything there.

Paying such fees and also not getting top rates could make for a bad combo.

May 22, 2024
6:30 pm
Bill
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I didn't know that, Loonie. I've seen fees for full withdrawal of RRIF, but which discount brokers are you referring to re charging a hefty fee to withdraw a partial amount if it's greater than the mandatory RRIF annual minimum?

May 22, 2024
7:06 pm
AltaRed
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That is my understanding as well, perhaps a $50 or $100 fee for account deregistration (collapse), but I have not seen any anecdotal indication/evidence of RRIF withdrawal fees for amounts in excess of annual minimums at any discount brokerages I am familiar with, nor whether they are annual, quarterly or monthly withdrawals.

May 22, 2024
7:31 pm
mordko
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Questrade will charge for a “partial transfer of account to another institution” if you fill in the transfer form at another brokerage. Certain transfer methods, like wire transfer would incur fees. But they won’t charge for a standard RRIF withdrawal over the minimum. WS won’t charge either.

May 23, 2024
8:08 am
RetirEd
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Late last year, I was allowed to take a 1-year RRSP GIC maturing after my 71st birthday at Peoples. They confirmed I'd be able to transfer it out (without fee, which Peoples does not charge for withdrawals anyway) any time before it matures.

Earlier this year, I did a lot of research into RRIFs to prepare (including discussions here) and all the outfits I spoke to assured me they'd allow withdrawals as needed to satisfy mandatory minimum withdrawals. None reported fees. I didn't ask them all about withdrawing more than the minimum.

RetirEd

May 24, 2024
5:34 pm
Bill
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Thanks for the input, AltaRed and mordko. That's my understanding too, to date I've not seen any evidence to support the suggestion made in post #15 that RRIF partial withdrawals in excess of the minimum amount for the year could incur a hefty fee from a discount broker. Transfers or account closures are another matter.

Usual fees are not a big deal to me but I'd certainly want to know about any hefty ones before I start withdrawing from a RRIF, I plan to take out irregular amounts whenever I feel like it, not just the mandated minimum amount every year.

A review of TD Direct Investing fees info yielded no mention of such a fee, at least that I could see.

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