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Converting an RRSP to a RRIF questions . . .
August 20, 2023
10:45 am
Dean
Valhalla Mountains, British Columbia
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G'day Mates (that's Australian for 'Howdy') sf-wink

It's 'That' time for me, when I have to convert my RRSP Investment Account over to a RRIF. These are two questions that I've been pondering . . .

    - Do I have to convert All my investments in the RRSP Account (stocks, ETFs, GICs, ISA) to uninvested Cash, before converting over to a RRIF ?
    .
    - Once it's converted to a RRIF, do I have to make my first RRIF withdrawal this year, or can I wait until next year to make my first RRIF withdrawal ?

Thanks for the help,

    Dean

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

August 20, 2023
11:19 am
Norman1
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With a trusteed brokerage RRSP, one will be transferring to a new trusteed brokerage RRIF.

Yes, one can transfer the investments in the RRSP in-kind to the new trusteed brokerage RRIF without first liquidating the investments.

dougjp reported that there could be some straggler dividends and distributions that arrive in the brokerage RRSP after the transfer.

August 20, 2023
11:48 am
julio
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Latest possible conversion is by the end of the year in which you turn 71, let's say, it is this year. Then NEXT calendar year you have to withdraw a set percentage of your account's value on December 31 of this year. Or more, if appropriate for your personal situation. The percentage for 71 is 5.28%.

RBC "5 things to know about RRIF":
1. You aren't required to make a RRIF withdrawal in the first year your account is opened. You have until the end of the following year to make your first withdrawal
2. All withdrawals are included in your income for the year and are taxable at your marginal income tax rate
3. If you have more than one RRIF account, you must withdraw at least the minimum annual amount from each of your accounts
4. You can choose "in-kind" RRIF withdrawals — this means you can withdraw securities at their fair market value (without selling them) to help meet the annual minimum withdrawal requirement
5. Withholding taxes will apply to withdrawals of cash and/or in-kind securities that exceed your annual minimum amount.

August 20, 2023
12:59 pm
cgouimet
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Yes, all RRSP's must go to RIF's before end of year in which you turn 71.

And since...

- you don't need to withdraw anything from the RIF until the end of the year following the year the RIF is opened

- you can convert everything as is

- you can manage the content of your RIF

Why wait to the last minute? If 2023 is your 71 year, start now at your leisurely pace and avoid hickups or stragglers ...

CGO
August 20, 2023
1:57 pm
Dean
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Thanks for all the comments & info. sf-smile

Glad to hear I'll be able to convert to a RRIF, with all my investments still intact. And if I decide to, I now understand I can put off my first RRIF withdrawal until next year.

My only concern now is receiving future dividends and other payments in
the new RRIF account. I don't want them to get lost out there, in the
proverbial 'Interweb Ether'.

Thanks Again & Cheers ❗

    Dean

P.S.
Yes ... I turned 70+1 this year, and I plan on starting the RRSP to RRIF conversion process at TDDI (a.k.a. TD WebBroker) this week.

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

August 20, 2023
5:49 pm
pooreva
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To my understanding as per CIBC presentation (in person, not app, not web crap) a while ago, RRIF is identical to RRSP Except you HAVE to take out minimum every year.
Meaning your stocks, mutual funds, etc. stay as is (in kind) and you can do the same trading as in RRSP (if you do that - sell, buy, etc.). Dividends are added at scheduled dates, no changes.

I wish you High income and Low taxes.
Do you receive CPP, OAS, (maybe) GIS? I guess you do receive interest from GIC/HISA and RRIF will be 'inconvenient' addition to your total income.

Let us know how it goes!!! MANY people will be interested!

August 20, 2023
6:12 pm
Bill
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With TD DI is it a matter of converting the RRSP account to a RRIF account (i.e. same account number) or do you open a new RRIF account (new account number) and then, once open, transfer investments from the RRSP account to the new RRIF account?

If the latter then it's probably a good idea to have the RRIF account open by the beginning of the last quarter of this year so that you can make sure any dividends, etc paid in the last quarter find their way into the RRIF account or else (if they still go to the RRSP account) get it corrected for the first quarter of next year, no?

August 20, 2023
8:26 pm
Norman1
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Dividends and distributions will end up being paid into the account that held the shares/units on the record date. So, the goal is to get the share/units transferred out of the RRSP and into the RRIF before the record dates.

August 20, 2023
9:09 pm
Loonie
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In this household, we converted at 71 a few years ago through a couple of banks/CUs and also TDDI.

I think there is an excess of worry expressed in this thread. The FIs are quite familiar with the conversion process. You are just changing suitcases, as it were, not changing the contents. Dividends etc will go where the investment is at that time. If it's in the RIF, then that's where they will go. Pooreva's summary is accurate and will apply elsewhere as it's all standard procedure.

There are other things worth focusing on, namely....

Don't leave it until the end of the year in which you turn 71. Sooner is better and it won't have a negative effect to start early in the year. I had one once (Scotiabank) that told me in early November or late October that they required an in-person visit to my specific branch which they couldn't arrange until January!
If for some reason you don't get it done, almost certainly they will do it automatically for you at end of year.
The reasons for starting early are peace of mind, control of withdrawal date, ensuring beneficiary form in effect, choosing spouse birthdate etc, and thus not leaving it all up to the FI. If it's a trading account you also need to start thinking about this early so that there will be enough cash available to pay out the mandatory amount every year. You don't have to withdraw until next year but you may need to make that clear to your FI (most will start it the next year automatically).
You will need a new beneficiary form for your RIF. Get the account opened and the form on file before you arrange for the transfer. You can have both RSP and RIF accounts at same time up to end of year turning 71.
You CAN choose the specific withdrawal date that suits you, although some FIs will balk at this and tell you they have one date for everyone. You must insist on your rights.
Remember that mandatory withdrawals are based on the balance at end of previous year. If it's a trading account, your balance could have declined since then, but you still must pay as of Dec 31 balance. This tends to have a conservatizing effect on investors, once they realize the implications.
The rate of withdrawal is based on age at previous year end.

We have found that the attitude from FIs is often that you should just leave it to them and can sometimes be dismissive of client's desire to be involved. Thus, it's possible they will not prompt you do a new beneficiary form or ask you for the date on which you want withdrawals or whether you want the age on which mandatory withdrawals are based to be that of the annuitant or that of the spouse , which is your option and may be an important consideration for some.

In my experience, these are the important issues that may get overlooked or misunderstood.

August 21, 2023
5:50 am
Bill
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With TDDI (maybe with everybody) you can set up monthly withdrawals if you want the income monthly. You can also log on and make a withdrawal whenever you want.

When I hit 71 I'm going to get the RRIF set up first thing in that year, why not?

August 21, 2023
7:04 am
Norman1
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As Loonie mentioned, make sure one signs a RRIF beneficiary designation for the new RRIF if one wishes to designate the beneficiary that way.

Probate Court almost tossed out the RRSP beneficiary designation form for a $370,000 RRIF.

August 21, 2023
8:29 am
cgouimet
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Bill said
With TDDI (maybe with everybody) you can set up monthly withdrawals if you want the income monthly. You can also log on and make a withdrawal whenever you want.

When I hit 71 I'm going to get the RRIF set up first thing in that year, why not?  

No reason not to.

You don't need to withdraw anything until the year following opening the RRIF.

The withdrawal formula for any year is PreviousYearEndBalance * CurrentYear % from RRIF table; 5.4% @ 72 climbing to, and staying at, 20% @ 95.

CGO
August 21, 2023
8:44 am
cgouimet
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Most here already know this but for those who don't ...

RIF's have yearly Withdrawal Minimums. LIF's have Minimums and Maximums per this schedule ...

LIF-RIF-Table.png

CGO
August 21, 2023
11:58 am
Dean
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Norman1 said

Dividends and distributions will end up being paid into the account that held the shares/units on the record date. So, the goal is to get the share/units transferred out of the RRSP and into the RRIF before the record dates.  

Thanks for all your help here (and elsewhere) Norman, but I'm not familiar with the term; 'Record Date'.

What does that refer to?

    Dean

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

August 21, 2023
12:23 pm
Bill
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Whoever owns the shares on record date gets the subsequent dividend payment.

August 21, 2023
3:46 pm
Dean
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Thanks for that , Bill.

I know it as; 'Ex-Dividend Date'

If 'Record Date' = 'Ex-Dividend Date', then I think I understand.

But then each share/unit has it's own separate Record Date. So you're bound to
miss some payments during a RRSP>RRIF conversion, no matter how well
you time it ... no?

    Dean

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

August 21, 2023
3:50 pm
Loonie
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cgouimet said

The withdrawal formula for any year is PreviousYearEndBalance * CurrentYear % from RRIF table; 5.4% @ 72 climbing to, and staying at, 20% @ 95.  

To be more precise, the rate of 5.40% applies in the year in which you TURN 73. Depending on your birthday and withdrawal schedule, you might be 73 or 72 for that rate.
By using the birthdate of the younger spouse, you may be able t stay with a rate lower than you would normally be subject to - if so desired. Personally, I think this is a good idea as it gives you more flexibility and control. You can always take out more if and when you want.

August 21, 2023
4:08 pm
Bill
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Dean, my understanding is that if you buy shares on Monday they will be yours on Wednesday (2 business days to settle). So if the record date is Wednesday you'll get that dividend payment as all owners at close of business Wednesday will get it. Thursday is ex-dividend date, i.e. if you settle your purchase on Thursday you'll be one day too late to get that dividend payment.

You shouldn't miss any payments, on record date your shares will either be in the RRSP or the RRIF account, you still own the shares that day.

August 21, 2023
5:11 pm
Norman1
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The record date is not the ex-dividend date.

The ex-dividend date is the first day the shares trade without the dividend. With T+2 trade settlement, the ex-dividend date is actually the trading day before the record date.

August 22, 2023
2:44 pm
Dean
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Norman1 said

The record date is not the ex-dividend date.

The ex-dividend date is the first day the shares trade without the dividend. With T+2 trade settlement, the ex-dividend date is actually the trading day before the record date.  

    BINGO ⬆ ❗

I'm going to start the conversion process tomorrow. I'll see if TDDI will keep my RRSP account open for a while, to catch any straggler payments (dividends, etc.) that are paid to it after the conversion is completed.

Fingers Crossed sf-smile

    Dean

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

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