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Converting RSPs to RIFs
July 19, 2018
4:18 pm
Loonie
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Over the last few years, I have either closed down or converted LIRA and RSP accounts to RIFs at several financial institutions. I am now finished with this process.

I have, quite frankly, been very surprised at the differences in quality of service amongst these FIs in completing this fairly simple task.

This is how I would grade them in terms of accuracy, efficiency, and knowledge. All the people I dealt with were friendly and pleasant.

TD - A
Scotia - B+
HSBC - C+
Meridian - A
Oaken - F (but they validated parking ticket for underneath 145 King)
Tangerine - F
National Bank - A+ (but they overcharge)

Some of these ratings may surprise you. They certainly surprised me.

I can only suggest that you need to be vigilant, especially with the lower-ranked FIs, to ensure that you are getting what you thought you were getting.

*EDIT: I changed Tangerine's rating from D to F after thinking further. The end result that I got there, as far as I know, was accurate, but the problems encountered along the way and the failure to provide adequate documentation (ever) were scary and I could not recommend to anyone that they try to convert an RSP to RIF there; hence an F.
I could still endorse Oaken as long as you're vigilant and re-read everything before signing and make sure you know what all your options are before you start. I think my problems may have been largely with one particularly poor CSR and may not be systemic. However, it may be a red flag that Oaken is having issues with hiring and training. Tang's issues, on the other hand, are systemic but appear to give the desired result - I won't know until next year.

July 19, 2018
4:52 pm
Kidd
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I switched my rsp into a rif at Outlook Financial in Manitoba. The idiot in this transaction was "me", not them... i did not understand that i could get a monthly payment from within a GIC, without breaking that GIC. I thought that i needed to keep enough money in savings, and then i could invest the rest into GICs. Because i'm thick skulled, it took 10 minutes for me to understand, why my entire rsp had been switched over to a rif, inside a GIC. I was like.... okay, if all my money is locked inside a GIC, where is my monthly payment coming from?

Maybe it took 15 minutes.

July 19, 2018
6:49 pm
Loonie
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You make a good point, Kidd, and it illustrates how well prepared one must be before undertaking this transition.
The situation with GICs can easily be somewhat confusing, although this was not an issue I encountered.
This is my major point, though, that there are things you have to watch out for and you can't necessarily depend on staff to get it right.

I didn't want to take the time to itemize every problem I had with each FI, but perhaps I can summarize the problems I encountered:
*Inaccurate recording of value of GIC on RIF form.
*Failure to follow my verbal instruction, given in person, as to which spouse's birthdate to use for mandatory withdrawal calculation (CSR seemed not to understand this issue at all).
*Wrong year for first mandatory withdrawal.
*Repetition of corrected error on form for second GIC.
*Inaccurate information about fee to close account.
*Two or more visits and/or phone calls required in order to either initiate or complete the transaction.
*Wrong information given as to what the process would involve and how long it might take (4 months versus one week).
*Internal policy forbidding deposit of mandatory withdrawal to in-house savings account (must be sent to external account or cheque mailed), with no explanation.
*Failure to record spousal information required for withdrawal based on spouse's date of birth.
*Failure to provide adequate documentation of new arrangements to cusotmer.

I had to give Oaken an F because there were five problems there.

All except Tangerine were conducted in-person at a branch.

Many of them had problems which might have been improved with better design of forms, excepting Tangerine which provides no forms except a beneficiary form (on request only).

July 19, 2018
8:52 pm
AltaRed
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What kind of experiences, e.g. issues, are people having converting RSPs to RIFs at discount brokerages... as compared to banks? Any particular issues with RBC Direct Investing or Scotia iTrade? DW will need to convert her RSP to RIF in 2019.

July 30, 2018
10:29 am
dougjp
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AltaRed said
What kind of experiences, e.g. issues, are people having converting RSPs to RIFs at discount brokerages... as compared to banks? Any particular issues with RBC Direct Investing or Scotia iTrade? DW will need to convert her RSP to RIF in 2019.  

Zero issues with CIBC Investors Edge. The only thing that had me confused briefly was getting dividends paid into the RSP after it was "transferred in kind" to the RRIF. That's because on shareholders of record date it was still in the RSP. No big deal, just make sure they don't immediately close the RSP.

December 22, 2018
12:22 pm
anitavirginia
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I have a 5 yr gic in a rrsp at icici bank. I want to cash the amounts and include in my taxable income. What amounts are I entitled to, since the gic term in midterm. Should I convert to RRIF before cashing out.

December 22, 2018
1:00 pm
Loonie
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You'd have to ask icici to find out what you can do with your GIC mid-term.

The only reason you might want to first convert to an RIF is if you are at least 65 years old and you don't have any other income that will qualify for the Pension Tax Credit - such as from a Registered Pension Plan.

December 22, 2018
1:14 pm
anitavirginia
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One previous response from their call center, advised that I would be only entitled to .5% interest on monies if I do not wait to maturity of 5 yr gic.

If I convert to RRIF, would I get the full posted rate of my gic even though I am only half way through 5 yr term. And then pull it out of my rrif.

December 22, 2018
2:55 pm
Norman1
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Does ICICI Bank Canada even offer RRIF accounts?

I only see TFSA, RSP, and RESP accounts on their Investments page. If ICICI Bank doesn't do RRIF accounts, then one would have no choice but to break the GIC early and transfer out to another financial institution that offers RRIF accounts.

December 22, 2018
5:53 pm
Loonie
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i have occasionally found that some financial institutions do offer RIFs even though there is no mention of them on their website, but I don't know about this one.

An RSP can be converted to an RIF during the term of the GIC, in which case the GIC just continues on until maturity as if nothing had changed.

If your goal in converting to RIF now is to avoid the reduced interest when you then cash in early, I don't think that will work.
However, if you do the conversion before the end of the year and then choose a date in early January for your mandatory withdrawals, you should be able to get that much out without penalty. They might even allow you to set the withdrawals for a larger amount, but that would have to be the same every remaining year and tax would be deducted from the excess portion.

December 23, 2018
12:03 pm
anitavirginia
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the following is an excerpt from their web page, and is the only place I see RIF mentioned. A few calls to the call center have been made, and they have a negative response to the question , do you offer RRIF's. I want the money out, and don't care how to do it. I am not concerned about withholding tax, as it is time to file 2018 return soon anyway, and will come out in the wash.

"What happens to my RSP when it's time to retire?
Whether you are retired or you are still working, you may keep or withdraw/convert your RSPs anytime until the year in which you turn 71 at which time you may choose from the following options: (1) withdraw your RSPs, (2) transfer your RSPs to a Retired Income Fund (RIF), (3) use your RSPs to purchase an annuity for life or, (4) use your RSPs to purchase an annuity spread over a number of years."

http://www.icicibank.ca/person.....9153855794

December 23, 2018
12:45 pm
Loonie
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I would interpret that to mean that you can convert your RSP to RIF at icici. The four options they give are standard for any RSP, not specific to icici. They may, however not be interested in people transferring RIFs into icici, but that's not your concern.

However, "withdraw your RSPs" may not refer to GICs. It may only refer to an RSP savings account.

I go back to my first comment, #7 above, which I think still holds.

Here's what I would do. I would convert to an RIF. This at least allows you to start withdrawing, and there is nothing they can do about it. Usually, you have an option to take the mandatory amount in the year of conversion. I would insist on that.
You need to read the Terms and Conditions that went with your GIC. If it says non-redeemable, then I think you won't be able to do anything further on redemptions. I once had a lengthy exchange with Oaken over this issue, although I was just planning ahead and did not have a need at the time. They were evasive as to whether the GIC could be broken. It would be at their discretion.
I think you need to talk to a manager to see if anything can be done about the GIC. Can you get in to a branch to do that before end of year?
If the end result is that the GIC cannot be broken, then your next best option is, as I said, to convert to RIF and set it up for a larger-than-mandatory annual withdrawal, beginning 2018. I am not sure how much discretion/control they would have over that amount. If it's a smalish RSP, which it likely is since you want to take it all into income, then they might be willing to just do what you want and let it go.
Good luck!

December 23, 2018
3:09 pm
Norman1
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If ICICI Bank does not offer RIF's, then there may not be an option to "convert" the RRSP GIC to a RIF GIC with them.

Check with ICICI Bank to see if they offer RIF's for those who currently have an RRSP with them. If not, then one will have to break the GIC and transfer the RSP to another financial institution that offers RIF's.

December 23, 2018
3:25 pm
Loonie
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He doesn't have time to transfer to another institution if he wants to get the proceeds in this calendar year's taxes. They may not be under any obligation to allow you to redeem any of the GIC, especially if you are under 71 years - unless you convert to RIF and take what you can this year and next. If by chance you turned 71 in 2018, then your problem is solved because any outstanding RSP will be closed down automatically, by law, at the end of the year.

You need to get into a branch first thing Monday to start things rolling. The paper work would likely have to be done in person, if it is possible, and you can't afford to delay.

I just got off the phone with Tangerine, where I was informed that Monday, Christmas Eve, is not counted as a banking day, and neither is Dec 31. If icici is of the same opinion, then you only have two days - Thurs and Fri, in which to make something happen this calendar year.

Note that there are 3 separate operations involved here, from the point of view of the bank: 1. Transferring to RIF. 2. Withdrawing funds. 3. Closing down RSP/RIF. Bear this in mind while talking to them. You may be able to get 1 and/or 2 and delay 3, which seems to be time-consuming for some financial institutions. If they say "no", make sure you are talking about the same operation.

December 24, 2018
9:41 am
anitavirginia
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Thanks for all your comments. It helped me through the process.

just returned from branch. ICICI.

They advise that they do not have RRIF product.

Best they could do was to close gic rrsp into savings rrsp, at a reduced interest rate of .5%. They hope this will be processed by Thursday the 27th. Then they will transfer funds from rrsp savings to regular savings, hopefully before the end of 2018.

Fingers crossed. They advised to call them on the 27th, to follow up.

December 24, 2018
10:13 am
AltaRed
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If you are simply looking to "crystallize" your RRSP GIC into 2018 taxable income, why not ask them just to transfer the GIC out of the RRSP into non-registered ICICI account and keep the GIC intact at the current contracted interest rate? This is called an 'in-kind' withdrawal.

Of course, if you are really needing the cash, that is an entirely different matter.

December 24, 2018
11:11 am
anitavirginia
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They didn't offer this as a solution. I wish I had this suggestion to discuss with them earlier today.

December 24, 2018
11:33 am
Retep
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I have an RRSP that will mature in 2019 at Hubert. I plan to move the funds from my RRSP savings account to a RRIF Account and do multiple withdrawals while in the savings account. Would I expect any problems or surprises?

The reason why I chose to try this at Hubert is.......Oaken does NOT have savings accounts for registered funds.

It is a worth while effort to turn on ALERTS on your Credit Cards and Bank/Credit Union Accounts.

December 24, 2018
12:53 pm
Norman1
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anitavirginia said
They didn't offer this as a solution. I wish I had this suggestion to discuss with them earlier today.  

In-kind withdrawals from RRSP and RRIF accounts are allowed by the Income Tax Act.

Unfortunately, ICICI Bank may not offer that as an option, as financial institutions are not required to offer in-kind withdrawals. As well, the tax withholding is not waived when one does an in-kind withdrawals. If it were an option, you would have to provide additional funds to ICICI Bank for the tax withholding that is normally taken out of a cash withdrawal.

December 24, 2018
3:12 pm
Loonie
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I'm glad you were able to find some kind of solution, even if not the best possible one.

I think it speaks very badly for ICICI that they were not more professional. Any FI that offers RSPs ought to offer RIFs. Some of them don't want to bother because RIFs are a declining asset and they are only interested in drawing in your money, not so much serving your needs. It's a cautionary tale for others. It is no doubt also a cautionary tale for OP, who certainly won't allow himself to get into a situation like this again, I'm sure.

I would be there in person again early Thursday afternoon to make sure everything goes as planned. Clearly they are not used to doing this, and things can get busy at banks at end of month and end of year. The guy who is there in person is more likely to get looked after. You can't afford for them to let things slide. I've cashed in enough RSPs and RIFs to know that things don't always go as planned. Every Fi that I have dealt with on this question has handled things differently, with varying lengths of time involved.

The transfer in-kind is a good idea, one I was not aware of. At the same time, though, it appears ICICI is not aware of it. If you had tried to do it, it might have taken them even longer to work out! - time you can't afford.

For the person who inquired about Hubert, I would not anticipate any problem. But allow time for the switch. Set up the RIF first. Transferring the funds should be easy, and I recommend phoning them to walk you through it so that you don't accidentally de-register. I haven't done this precise manoeuvre with them but they have been very good about moving money around within an RSP from savings to GIC and back. Just today spouse moved funds from the old rate of one year GIC to the new one, and also made a withdrawal. All in one phone call.
There are two issues that I am aware of with Hubert.
If you set up a registered plan but don't put any funds into it during the year in question, they will close it on you at the end of the year. This can cause an upset if you had funds in transit from elsewhere at that time.
The second is that Hubert doesn't offer any kind of one-year GIC for RIFs at all. For this reason, I will not be using them for RIFs.
When my existing RIF GICs mature, they will likely be transferred to Accelerate, where they will remain unless something better appears that is in my province of residence, which I would prefer. I have cashed out most of them for tax reasons, so will let them wind down at Accelerate. Accelerate allows up to 20% withdrawal annually, which gives me enough flexibility to meet my tax needs, along with proceeds from maturities. I don't know any other FI that offers this.

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