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Avoiding RRSP Fees For Transfers Out
May 24, 2018
8:24 am
GR
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Which, if any, financial institutions do not have fees to transfer out RRSP funds?

Which, if any, financial institutions, receiving RRSP transfers in, reimburse fees charged to clients by the other institution transferring RRSP funds out?

I am looking for helpful replies to my 2 specific questions, not justifications for the exorbitant fees charged. Thank you.

May 24, 2018
8:30 am
skibum
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RBC refunded me several times. I had to send a copy of my statement with the fee highlighted. The first time they sent me instructions and after that I just submitted the statement copy with a request for refund and a credited showed on my account a few days later.

May 24, 2018
8:33 am
Rick
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Tangerine - 40.00 Trf out - not sure if they reimburse
Peoples Trust - No charge Trf out - not sure if they reimburse
Motive - 50.00 out - will reimburse once up to 50.00
Hubert - no outgoing fee - will NOT reimburse

Those are the ones I've dealt with.

May 24, 2018
8:38 am
Top It Up
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skibum said
RBC refunded me several times.  

I have NO experience transferring in funds to RBC but I am currently in the process of divesting/moving my RRSP holdings out of RBC and there is a Transfer Out Fee of $135 per request; the receiving credit union said they WILL NOT reimburse the fees.

It will take me 5 years to collapse the laddered GICs in the account, for a total transfer out fee of $675.00 + GST.

May 24, 2018
8:41 am
GR
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To clarify, I'm actually trying to avoid transfer out fees completely - now and later. i.e. If I transfer out now, I want an institution that will reimburse transfer out fees charged by my current institution. Later, when I move funds out from the "new" institution, for whatever reason, I don't want to pay fees then either. So, does any institution reimburse fees AND not charge fees - or only in Utopia???

May 24, 2018
9:05 am
Norman1
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GR said
To clarify, I'm actually trying to avoid transfer out fees completely - now and later. … So, does any institution reimburse fees AND not charge fees - or only in Utopia???

That is not going to be easy to find: Reimburse on transfer in and not charge on transfer out.

To such a receiving financial institution, that would be like paying a bonus on transfers in. For example, if I were reimbursed $135 for a $10,000 transfer into an one-year GIC, that would be like paying an extra $135/$10,000 = 1.35% per annum on the GIC.

They may consider it for $500,000 into a five-year GIC. That would work out to be about $135/$500,000/5 = 0.0054% per annum extra. They may still say no but offer an extra 0.01% instead. 0.01% x $500,000 x 5 = $250 which would more than cover the $135. sf-smile

May 24, 2018
9:33 am
Rick
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Top It Up said

I have NO experience transferring in funds to RBC but I am currently in the process of divesting/moving my RRSP holdings out of RBC and there is a Transfer Out Fee of $135 per request; the receiving credit union said they WILL NOT reimburse the fees.  

135.00?? holy c**p! No wonder they profit billions per quarter.
Norman1 Is probably right...depends on how much you want to transfer. Pick your FI and talk to someone with authority with details. If there is enough incentive, you should have no problem getting reimbursed, policy or no (except Coast Capital LOL!!). Motive also took the trf fee out of my non-registered fund at my request. Are the fees tax deductible? Not sure...never had to pay them until next year.

May 24, 2018
9:41 am
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Rick said

135.00?? holy c**p! No wonder they profit billions per quarter.   

Well, it is a self-directed RRSP at their brokerage arm that I opened in the mid-80s that has allowed me to hold a diversified portfolio of investments and back then there probably weren't any fees AND there wasn't anyplace else to transfer the account to to get that kind of diversity anyway. I'm certainly not mewing and crying over the fees, it's the cost of doing business.

May 24, 2018
10:23 am
Bill
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Rick, you're right, if your business is worth it to anyone then lots of stuff's negotiable re their fees or reimbursing fees paid to others. Otherwise we all want to be paid for doing work for others, as far as I can see (except for friends and family, as we're already getting other benefits in return from those relationships).

The fees are not tax deductible.

May 24, 2018
10:51 am
Saver-Mom
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In my experience, those who charge fees are often willing to reimburse, those who do not are not. Holds for most places. Also, big banks tend to have high fees. I suggest not laddering nor splitting RRSPs if you plan to transfer often. If you are older, look for a place who can accept RRIFs.

May 24, 2018
5:56 pm
Loonie
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Bill said

The fees are not tax deductible.  

I think that, effectively, they are tax-exempt. You didn't pay tax when you made the deposit in the first place, and you don't pay it when the money is taken out as a fee. It simply disappears from your asset.
Not quite as good as tax deductible, but reasonable.
What is not reasonble is increasing the fees part-way through a GIC, where you have no recourse and there are no limits to what they can charge.

May 24, 2018
6:03 pm
Loonie
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Saver-Mom said
In my experience, those who charge fees are often willing to reimburse, those who do not are not. Holds for most places. Also, big banks tend to have high fees. I suggest not laddering nor splitting RRSPs if you plan to transfer often. If you are older, look for a place who can accept RRIFs.  

What do you suggest in lieu of laddering?

Given CDIC limits, it may not be possible to keep the entire RSP in one place, although it is possible with Credit Unions as they have unlimited insurance coverage. Do you feel that CUs are the better bet, then ?

May 24, 2018
6:55 pm
Saver-Mom
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What I meant was pick a term for each different FI...I have too many laddered RRSPs, and will have to pay multiple fees when I want to leave. Am now trying to consolidate within a daily interest account then will move large amount with one fee. You can choose different terms in different FIs which ladders between rather than within FIs.

May 24, 2018
7:51 pm
Bill
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When you contribute to your rrsp you get a tax deduction (assuming you claim the deduction then). A later withdrawal from the registered account, to pay someone a fee or otherwise, I would assume is taxable income to you and would be included in the T slip amount for that year.

May 24, 2018
8:09 pm
Saver-Mom
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When I said leave I meant transfer out to another FI, not withdrawal of funds.

May 24, 2018
9:38 pm
Loonie
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Bill said
When you contribute to your rrsp you get a tax deduction (assuming you claim the deduction then). A later withdrawal from the registered account, to pay someone a fee or otherwise, I would assume is taxable income to you and would be included in the T slip amount for that year.  

edit: I'd have to check again in my papers to be absolutely certain (I don't do this on computer) but am pretty sure I was not taxed on that fee in the 3 times I have collapsed an RSP/RIF so far; and that the T slip showed only the post-fee amount. I was watching to see what would happen, as I wasn't sure how it would be handled.

It makes sense when you think about it as it makes no sense to be taxed on money you never ever had your hands on to spend. It's really as if you never earned it.

I think that's the reason they don't give a tax credit - because it was never taxed before. It would be too complicated to sort out what was fair, and not worth it for such a small amount.

May 24, 2018
9:42 pm
Loonie
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Saver-Mom said
What I meant was pick a term for each different FI...I have too many laddered RRSPs, and will have to pay multiple fees when I want to leave. Am now trying to consolidate within a daily interest account then will move large amount with one fee. You can choose different terms in different FIs which ladders between rather than within FIs.  

I see what you mean now.
This is why Oaken is such a PITA for not having savings option!

May 25, 2018
3:56 am
Saver-Mom
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Agreed. At least they have been offering good rates and do have RIFs

May 25, 2018
9:46 am
Bill
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Loonie, I don't follow. If I earn after-tax $100 and put it into my RRSP I get a tax deduction so I'm back to pre-tax, i.e. the Treasury and my fellow Canadians have got net zero tax from those earnings. Later, when that $100 is in a RRIF I might either withdraw it (subject to tax then) or spend it on a fee. Why should the result be different in the latter case? i.e. there's been no net tax received by the Treasury on that money in the latter case only.

And why should it be different if I choose to pay my fee out of another non-registered account (i.e. the $100 remains taxable when I take it out of the RRIF) vs out of the RRIF account? I had an obligation to pay someone a fee and that obligation was erased when they took it directly out of my RRIF, so the elimination of that obligation = I did "receive" it.

Maybe someone else has some info on this. There can be other fees associated with registered accounts (e.g. annual management fees, though they are usually erased if your account is over a minimum value), has anyone noticed any tax implications of paying them out of the registered account?

May 25, 2018
10:02 am
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From Moneysense.ca -

Fees paid for RRSPs, whether embedded fees in your funds or fees charged separately to your account for investment management are specifically not tax deductible. If you pay an annual administration fee, this too is not eligible for a tax deduction.

This lack of tax deductibility applies for all registered accounts, whether an RRSP, LIRA, RRIF, LRIF, LIF, etc.

As a rule, if the income isn’t taxable – registered accounts are tax-deferred – costs related to earning that income are not deductible. This applies to investment fees as well as interest costs.

--------------------------------

From the CRA General Income Tax and Benefit Guide 2017 -

Line 221 – Carrying charges and interest expenses

Claim the following carrying charges and interest you paid to earn income from investments:

■ fees to manage or take care of your investments (other than any fees you paid for services in connection with your pooled registered pension plan, registered retirement income fund, registered retirement savings plan, specified pension plan, and tax-free savings account);

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From my brokerage firm -

Annual Administration Fee on Registered Plans

The annual administration fee for your registered plan, plus appropriate taxes, has been deducted from your registered plan if applicable.

You now have two options:

1. You can choose to make a payment from outside your registered plan to cover the fee (no tax receipt will be issued).

OR;

2. You can choose to have the fee covered from within your registered plan. No action is required if you have sufficient cash in your plan. If you do not have sufficient cash in the plan, you can:

- Make a Registered Retirement Savings Plan (RRSP) contribution, provided that you have contribution room available (a tax receipt will be issued). Please clearly indicate to your Investment Advisor that you are making an RRSP contribution.

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