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Oaken Retirement Savings Product: Is it RSP or RRSP?
July 10, 2017
5:22 pm
Sammi
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Hi,
I am not sure if Oaken Financial's RSP is same as RRSP so I sent them a question re: this confusion. Below are my question and the response I received from an Oaken Financial's Alexis Cappa - Sales & Service Specialist - Deposits.

Dear Madam/Sir,
I would like to know if Oaken Financial's product include RRSP?
Thanks.

Response:
"Oaken Financial does have RRSP GICs.
You can see our current rates for the product below: ..."

Question:
Hi Alexis,
Please tell me about RSP and RRSP.
Which one does Oaken Financials have and why?
Thanks.

Response:
" They are the exact same.
It is just at Oaken Financial we dropped the first “R”.
We do offer Registered Retirement Savings Plan. "

I feel that this sales person does not know what he is talking about or actually deliberately providing a false information with intent to mislead customers.

Could someone comment or provide more info about RSP and RRSP. If I subscribe to Oaken Financial's RSP would I be eligible for the GOC tax benefit in same manner as RRSP offered by other financial organizations?

Thanks.

July 10, 2017
5:55 pm
Cranston
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They are correct RRSP and RSP is same. They have a registered tab then RSP and put it all together = RRSP.

I know I supposedly applied for both RRSP and RSP and when it comes to tax withdrawals I get the same T4RSP slip.

Ie.
On the T4RSP slip, in Box 22 – Withdrawal and Commutation Payment, will be the full amount withdrawn from your RRSP account. On the same T4RSP slip, in Box 30 – Income Tax Deducted, the total withholding Tax deducted from your RRSP withdrawal will be stated. Both of these numbers are entered in your income tax return.

There is another forum with this subject that hopefully you can find the previous answers.

And yes, based on your income, you would receive a tax credit for Oakens RSP.

Their website lacks the word registered and uses "retirement".
But their site says:
Save for your retirement with a Retirement Savings Plan (RSP)

With an RSP from Oaken, you can put money aside for your retirement in a secure investment that guarantees your principal and your interest, while taking advantage of the tax benefits that come with contributing to an RSP.

Once you see your online account RSP will show under the "registered" tab as do TFSA GICs.

July 10, 2017
6:15 pm
Sammi
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Thanks, Cranston. It is a little confusing because there are so many conflicting information online. Some say they're the same, some say they're not.

July 10, 2017
6:28 pm
Cranston
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You are correct about the confusion as the other forum said they were different. And probably, technically, they are ..... just make sure your RSP is registered before you buy.

The other forum says that RSP is a Retirement Savings Plan (not registered) which no doubt there very well could be one.

I don't think you will find a FI selling RSP that is not registered but asking for confirmation never hurts.

You will find Oaken to be very professional in their responses.

I prefer to email questions and keep responses on file for future reference, if needed.

I do my GICs online with Oaken and screen print each page of entry and they also send you a nice certicate for each GIC purchased with pertinent info on it.

And remember make sure you set up your successor or beneficiaries on the online form itself. Most FI's are bit different. Ie. you do a form at Hubert that covers all your TFSA or RRSP purchases.

July 10, 2017
6:42 pm
Cranston
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If you are just starting with Oaken you might want to set up a savings account (joint should be considered if partnered) and receive your account number and client number. And then set up one or more external accounts to do push/pulls. Then you are ready to transfer in funds and buy GICs. Also keep in mind Oaken only has RRSP GICs and no associated savings account. And at this time they do NOT have a transfer out fee for RRSPs.

July 10, 2017
8:03 pm
Sammi
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Hey Cranston,
I can't thank you enough! 🙂 Very valuable info and advise right there. Thanks so much for sharing your insight and knowledge. I will certainly open a savings account for the push/pulls. You're right about Hubert re: Successor/Beneficial forms thing. I have an account with them so I know what you're talking about.
I have been dragging my feet with opening the gic/rsp account with Oaken because of all the "news" that has been circulating; not mentioning the rsp/rrsp confusion.
Anyways, thanks so much and have a good evening sf-smile

July 11, 2017
10:36 am
AlainJF
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Cranston said
... Also keep in mind Oaken only has RRSP GICs and no associated savings account. And at this time they do NOT have a transfer out fee for RRSPs.  

What are the "exit strategies" possible at Oaken with RRSP GICs if they do not have "RRSP Saving Account" ?

Where does the RRSP money go at the end of the RRSP-GIC term if you do not want to take another RRSP-GIC with Oaken ?

I am familiar with T2033 transfers but I have only used them on "moveable $" (not GIC). How do you do that ? What "maturity" arrangement do you set with Oaken ?

July 11, 2017
10:58 am
Cranston
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What are the "exit strategies" possible at Oaken with RRSP GICs if they do not have "RRSP Saving Account" ?

They send you a letter that your RRSP GIC is about to mature. You call them and make it clear that the GIC is NOT to be renewed and you will be transferring out. You then work with the FI you plan to transfer to and fill out their transfer form. Oaken does the transfer fairly quickly for you. And when you call them also mention it would have been nice if they had an associated savings account for RRSP. I have RRSPs with them and will need RRIF as well to allow splittable income. I need to withdraw RRIF funds that exceed the minimum and without the savings account I cannot use Oaken to do so. Oaken in this case is not a DIY paradise. 🙂

Where does the RRSP money go at the end of the RRSP-GIC term if you do not want to take another RRSP-GIC with Oaken ?

Into limbo. I have only transferred out of Oaken once. I forget if it remained showing on my account.

I am familiar with T2033 transfer buy I have only used them on "moveable $" (not GIC).

Correct, I don't believe you can move a GIC unless it is cashable or has matured. But you can "pre do" the T2033 form and indicate to move the funds after maturity. Make sure you do the forms weeks ahead of time to allow the new FI to have it at Oaken before the GIC matures.

July 11, 2017
11:05 am
AlainJF
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Thanks a lot for your clear answers to all my points ! Really appreciated !

And I will certainly tell them... " it would have been nice if they had an associated savings account for RRSP !!! "

July 11, 2017
2:42 pm
Loonie
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Cranston, I have wondered the same question. I think it just sits in nowheresville, collecting no interest, in the interim, but there must be a time limit on that.

Oaken has been told before that this is what we want and need, and they have said, if I remember right, that they are considering it for the future maybe. No rush, eh?

I think that most financial institutions have not yet fully come to terms with the implications of RIFs. They are still focused on RSPs and TFSAs, where they expect the clients to have longer trajectories.
There are issues that come up with RiFs that only emerge when you start dealing with them - at least that's been my experience so far. And we are an aging population.

Perhaps not surprisingly, Oaken will also not commit to allowing you to take a lump sum from your RiF during a GIC, should circumstances and needs change. For those of us who are GIC investors, we need an "out", a cashability option for RIFs. If you have a "bad health" year and suddenly have a lot of expenses, you need to know you can draw on some of your money, maybe even a lot of it if you are dying. And death will surely come to those of us in the RIF category. It's needs like this that haven't been thought through, seems to me. There are various ways they could address this if they were thinking about it - change the rate, penalty for cashing in, insuring against the need, etc. - and they could still make money on all of them. The financial journalists don't seem to be addressing this either. (Hint! Hint! to those who are reading this.)

Laddering is not sufficient to deal with the issue, as it only frees up a portion of your assets annually.

July 11, 2017
3:59 pm
Cranston
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I believe Accelerate has a 20% more option when you receive your mandatory RIF payment.

Here is what I am up to.

Each year I remove from my RRSP through my RRIF $6100 each from my account and my wife's account. I take it in 2 lumps which could be weeks apart and then am only hit with 10% hold back vs 20% although I may have to pay more tax when all is said and done. So $6100 minus 10% is $5490 topped up with $10 is now my TFSA deposit. All set up in a nice 5 year ladder over multiple FI's.

So moving RRSP to RRIF before withdrawing is now income split-able income.

Accelerate has, I believe, a $5,000 minimum expectation for a RRIF account, while Hubert has none. So I move small amounts of RRSP to Hubert, convert to RRIF, withdraw and then decide who has the best TFSA rate and off I go.

Ideally I would like to move RRSP to RRIF and be able to manage RRIF using GIC's and a RRIF savings account.

I could stay with Manulife and get crappy rates and pay self directed fees at $150 x2 per year.
Use Accelerate with a bit of managing.
Use Hubert with less hassle.
Use Itrade with crappy rates and possible quarterly fees.
Or if Oaken could establish Savings Accounts for RRIF and RRSP
While all of the FI's in this process have great service, different policies and do and don't have savings accounts they still win for a period of time, being loyal can't happen because of the lack of services and rates offered. Just managing "MY" funds for the best rate.

While some folks may think this is odd....but eventually I will have all or most of our funds in TFSA. And will reserve for spending as though it were RRSP funds. So the older I get the less income I have and who knows what income based benefits that we may come eligible for?? Also in the event of death with no successor RRSP and RRIF will be heavily taxed for the last year of life vs little to no tax for TFSA. So if TFSA amounts increase just a bit over the years it will work out just perfectly.

July 11, 2017
4:44 pm
Cranston
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Accelerate RRIF Information

AcceleRate RRIFs

AcceleRate Financial offers Registered Retirement Income Fund products to all investors who have contributed to an RRSPs through-out the years. RRIFs can easily be transferred to AcceleRate Financial from other financial institutions across Canada.

By investing in an AcceleRate RRIF you will not only receive high rates of return on your investments, but our RRIF offers these services in addition:

Minimum amount required to open your RRIF is $5,000
Payment frequency is monthly, quarterly, semi-annually or annually
Payment options may be minimum payment, specified payment or specified term
Additional lump sum payments of up to 20% of RRIF balance permitted annually (conditions may apply)
RRIF payments paid to an AcceleRate high interest savings account

This information is excellent but would like to see where the RRIF funds are deducted from. ie. soonest to mature GIC, RRIF savings account or??

July 11, 2017
9:30 pm
Loonie
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Interesting info re: Accelerate. Good to see that at least one FI has taken up the challenge of dealing with periodic need for more funds from RIF. Their approach seems reminiscent of mortgages which allow lump sum payments periodically.

My understanding, open to correction, is that FIs are required to take the minimum percentage out of every solitary GIC and savings account. The only way around this that I know about is through a trading account in which case you can decide, as the whole trading account is treated as one, no matter how many individual investments. I got this latter interpretation from Dan Bortolotti (MoneySense, Couch Potato, now at PWL Capital) when I asked this specific question at an open forum a few months ago. He had no hesitation with his answer. However, my interpretation about the individuals GICs etc NOT in trading account is my own. Perhaps, if you have, let's say, 3 different GICs at one bank or CU, you will be able to also treat them as one and then be able to chose which to withdraw from, but that's only a guess. Certainly each institution will be required to make a withdrawal, so if you have 1 GIC at Bank A, and another at Bank B, each will deduct the minimum.

Perhaps Norman1 can enlighten us. He is so good about finding the exact rules about things. I wouldn't want to trust an opinion from a FI employee as they might be wrong, and then you're stuck. I imagine these withdrawals are all done electronically, no human hands involved, so the human heads are not likely to know the specifics.

July 11, 2017
9:42 pm
Loonie
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I can see your strategy re: RIF and TFSA, Cranston. Sounds like it will work very well for you. Make sure you both stay in good health to take best advantage!

Some people have more money in RSP/RIF than they can absorb into TFSAs (even if they live to 100) and will still be subject to the "death tax" at high rate. Some say they won't care as they'll be gone. For others, the inheritance is important so they want to preserve capital. And for some, the cash flow is part of the consideration, so they increase withdrawals to allow for that and may thus short circuit the death tax to varying degrees. Another consideration is that, assuming the TFSA continues to be offered, the contribution limit will likely increase periodically sf-smile (but, then, so will inflation!
The more you think about this issue, depending on how much you have in RSPs, the more you realize that it makes a lot of sense to take money out in any year when you may have a lower income year for whatever reason, long before you get to 72. No point in leaving it all there to pile up for the tax man.

July 12, 2017
8:21 am
Cranston
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Loonie said
I can see your strategy re: RIF and TFSA, Cranston. Sounds like it will work very well for you. Make sure you both stay in good health to take best advantage!

Some people have more money in RSP/RIF than they can absorb into TFSAs (even if they live to 100) and will still be subject to the "death tax" at high rate. Some say they won't care as they'll be gone. For others, the inheritance is important so they want to preserve capital. And for some, the cash flow is part of the consideration, so they increase withdrawals to allow for that and may thus short circuit the death tax to varying degrees. Another consideration is that, assuming the TFSA continues to be offered, the contribution limit will likely increase periodically sf-smile (but, then, so will inflation!
The more you think about this issue, depending on how much you have in RSPs, the more you realize that it makes a lot of sense to take money out in any year when you may have a lower income year for whatever reason, long before you get to 72. No point in leaving it all there to pile up for the tax man.  

Yes, good health be it RRIF or TFSA.

Keep in mind there is no such thing as a death tax but there are probate fees. In BC and if you do it your self, probate fees average 1.6% and probate court costs and notary fees are no more than $500. BUT income tax can be a huge hit especially from RRIF or RRSP funds.

See here re BC probate.
https://www.bcheritagelaw.com/legal-services/estate-law-information/estate-administration/probate-fees/

And yes it will take a long time to convert RRSP to TFSA and wish I had started when I first retired.

While planning to leave an inheritance for children and grandchildren is a nice idea I plan to take care of us at any cost and inheritance will be a bonus if it happens.

July 12, 2017
8:58 am
Cranston
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My understanding, open to correction, is that FIs are required to take the minimum percentage out of every solitary GIC and savings account. The only way around this that I know about is through a trading account in which case you can decide, as the whole trading account is treated as one, no matter how many individual investments

Yes my Manulife looks at the total and takes from there but I have very little in RRIF with them as I only flush RRSP through the RRIF. My RRIF account has $100 just to keep it open.

Accelerate led me to believe that they would only take the hit from one GIC.

I will contact a few FI's and let you know. Those policies may make a difference on who I deal with. But sometimes Oaken comes up top because their service and rates. But I must have access to remove more than the mandatory from either a RRIF "savings account" (hint hint) or from a matured GIC before it is renewed or transferred.

July 12, 2017
10:57 am
Bill
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Just to make sure I understand: If you have GICs in your RRIF account I believe you need to make sure you have enough liquid every year to make the minimum withdrawal. For example, if you only have a 5-year (non-cashable) GIC in a RRIF account my understanding is you're euchered for 4 years as you'll be unable to make the minimum withdrawal those years. Correct? Though maybe the FI won't let you buy the 5-year GIC in the first place as it won't comply with the tax rules and the FI is likely responsible for making sure a RRIF is compliant with the rules.

July 12, 2017
11:50 am
Cranston
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🙂 🙂 euchered 🙂 🙂 Although I guessed what it meant. I was right after I googled it!

I will make a new thread and respond. A FI will withdraw from a GIC from interest and/or principal. Am finding they have different methods of what GIC is selected. That is probably the maintenance why some FI's won't offer RRIF GICs.

July 12, 2017
12:09 pm
JenE
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I bought a 5 year GIC RRSP at Oaken last year and both Oaken rep. and I knew that I would have to RIF it before it matured. I was told that they knew they had to pay me the government-mandated minimum when the time came and that it wasn't a problem. I've also asked since then about riffing it early and withdrawing more than the minimum. Again, I was told that I could do that. Maybe I should re-confirm!

July 12, 2017
12:38 pm
Cranston
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JenE said
I bought a 5 year GIC RRSP at Oaken last year and both Oaken rep. and I knew that I would have to RIF it before it matured. I was told that they knew they had to pay me the government-mandated minimum when the time came and that it wasn't a problem. I've also asked since then about riffing it early and withdrawing more than the minimum. Again, I was told that I could do that. Maybe I should re-confirm!  

I doubt they will. If you can manage your own funds to have some mature each year and then take the withdrawal over and above the mandatory amount. But once again no RRIF savings account at Oaken to help you out.

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