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Question about transition from RRSP to RRIF
May 26, 2014
10:46 am
kanaka
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Hi Loonie. I just completed an RRSP transfer from Coast Capital to Oaken. Oaken will hold the rate for 30 days. So I assume the day they receive the transfer forms will have the interest rate of that day held for you for 30 days. I asked what if it took longer and with out committing to me, they "seem to be" flexible to ensure you get that rate or higher. My point to them was why waste my and their time if I don't get the rate? I realize you may have to pay a transfer fee and they will not pick it up for you, but even the 3% rate they are going to, for a five year is still the highest offered, I have an excel program if you like, so you can plug in the investment, rate and term so you can see the difference of 3% vs 3.05%.

May 26, 2014
10:59 am
kanaka
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Also I have a reply from oaken in regards to moving and RRSP GIC to a RRIF GIC.

In the event of your death the GIC automatically will be sent to the succesor annuitant.
- Succesor annuitant can request to move the GIC into their own account or cash it out and face taxation

Any RSP can be coverted to a RRIF upon receiving a RRIF application.

May 26, 2014
1:01 pm
Loonie
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Thanks, Kanaka. I think i'm OK now. Oaken responded quickly to my emails, beyond my expectations. I can do the conversion in year 4, the GIC remains intact, and I won't need to take anything out of the RRiF before the GIC matures in 2019 because it will mature in June but I don't have to take anything out until December (CRA rules).
So, to summarize, I can buy the 5yr GIC now, in the year I turn 67, and will get the full interest for the 5 years with no withdrawals.
Whew!sf-smile

May 26, 2014
1:06 pm
kanaka
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Loonie said

Thanks, Kanaka. I think i'm OK now. Oaken responded quickly to my emails, beyond my expectations. I can do the conversion in year 4, the GIC remains intact, and I won't need to take anything out of the RRiF before the GIC matures in 2019 because it will mature in June but I don't have to take anything out until December (CRA rules).
So, to summarize, I can buy the 5yr GIC now, in the year I turn 67, and will get the full interest for the 5 years with no withdrawals.
Whew!sf-smile

Lol. I find them to be very professional and helpful.sf-laugh Accelerate is too.

May 26, 2014
6:54 pm
Norman1
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kanaka said
Great idea but I am not poking holes or spitting hairs. Most of the places I deal with have a minimum $1000 deposit and some institutions require a minimum of $5 or $10 thousand for a RRIF GIC ....likely because of the extra maintenance.

That's a significant complication: a $5,000 or $10,000 minimum for an RRIF GIC. Great observation! Such a high minimum for each GIC would make it impossible to do for a $10,000 RRIF.

kanaka said
What of you totalled your first 4 numbers and bought a GIC and asked the institution to remove the first four withdrawals from it?

Yes, that would work if the institution allowed early, partial redemptions of the one GIC. It looks like Tangerine allows that for their RRIF GIC's.

Tangerine GIC's and Tangerine RRSP GIC's are redeemable early with a penalty that reduces the return to an early redemption rate of either 0.0% or 0.5%. However, for their RRIF GIC's, there seems to be no penalty for partial or full early redemptions for withdrawals. This is from their RIF FAQ:

Are there any penalties for redeeming from a RIF GIC, either for the minimum RIF Payment Amount or additional RIF withdrawals?

No, since you will be using the funds as retirement income, the regular Early Redemption Rate (ERR) will not apply to any withdrawals from a RIF GIC. Please note that partial and/or full RIF GIC redemption amounts that are in excess of your minimum RIF Payment Amount are still subject to withholding taxes.

May 26, 2014
7:05 pm
Norman1
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Loonie said
It really sounds like they are practically forcing us to keep some of our money in vehicles that have little reward. I don't like this, and the fact that it is so complicated, and so easy to get yourself into a mess apparently. Annuities are starting to look more attractive!
I am also fearful that we may never get straight reliable answers from these people. By the time you actually make the withdrawal, they may have changed their rules. Once they have gone ahead and taken whatever monies out of whichever registered pocket, you can't stuff it back in, even if they are wrong.
I am feeling very confused and distrustful. The language does not seem to be transparent and I just don't know what I might be getting myself into.
Question for Norman1: Have you experienced the scenarios you have described, or are you envisioning them as possibilities? It sure would be nice to know which institutions have the most user-friendly rules.

Yes, one does have to be careful to get everything straight before committing. I don't think the rules will be changed afterwards by the financial institution. I don't expect one to purchase a no-penalty, partially redeemable, five-year GIC for an RRIF and two years into the five years, the partial redeemability is taken away.

I've experienced the RRSP scenarios. But, not the RRIF scenarios. Not old enough yet to have to transfer what's in my RRSP's to RRIF's.

May 26, 2014
7:15 pm
Norman1
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Loonie said

I think i'm OK now. Oaken responded quickly to my emails, beyond my expectations. I can do the conversion in year 4, the GIC remains intact, and I won't need to take anything out of the RRiF before the GIC matures in 2019 because it will mature in June but I don't have to take anything out until December (CRA rules).
So, to summarize, I can buy the 5yr GIC now, in the year I turn 67, and will get the full interest for the 5 years with no withdrawals.
Whew!sf-smile

Glad to hear everything worked out for you; the 5-year GIC will mature months before the minimum withdrawal needs to be made.

May 27, 2014
10:34 am
AltaRed
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AltaRed said

I have made my own query to RBC Direct Investing and will report on what they say, e.g. should I buy a 5 year GIC (from any issuing institution) at age 69....will it rollover to my RRIF at age 72.

The response from RBC Direct Investing is:
- GIC Certificates <$1,000 are processed as a cash transfer RIF conversion.
- GIC Certificates with a term* greater than 5 years are not eligible for transfer.
- All other GIC certificates are transferred in-kind as requested.

* Not relevant since these cannot be bought (to my knowledge) at RBC DI, nor would they be CDIC insured anyway.

May 28, 2014
7:00 am
Norman1
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AltaRed said

I have made my own query to RBC Direct Investing and will report on what they say, e.g. should I buy a 5 year GIC (from any issuing institution) at age 69....will it rollover to my RRIF at age 72.

The response from RBC Direct Investing is:
- GIC Certificates <$1,000 are processed as a cash transfer RIF conversion.
- GIC Certificates with a term* greater than 5 years are not eligible for transfer.
- All other GIC certificates are transferred in-kind as requested.

* Not relevant since these cannot be bought (to my knowledge) at RBC DI, nor would they be CDIC insured anyway.

RBC Direct Investing would cash any GIC's that are less than $1,000? Is that the case even for a GIC issued by a financial institution outside of the RBC group?

May 28, 2014
8:05 am
kanaka
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Norman1 said

AltaRed said

I have made my own query to RBC Direct Investing and will report on what they say, e.g. should I buy a 5 year GIC (from any issuing institution) at age 69....will it rollover to my RRIF at age 72.

The response from RBC Direct Investing is:
- GIC Certificates <$1,000 are processed as a cash transfer RIF conversion.
- GIC Certificates with a term* greater than 5 years are not eligible for transfer.
- All other GIC certificates are transferred in-kind as requested.

* Not relevant since these cannot be bought (to my knowledge) at RBC DI, nor would they be CDIC insured anyway.

RBC Direct Investing would cash any GIC's that are less than $1,000? Is that the case even for a GIC issued by a financial institution outside of the RBC group?

Are we talking about the remains of a GIC being less than a 1000 as result of the mandatory withdrawals? If that is the case then it makes sense that it would be held in a cash account as most financial institutions have a minimum GIC deposit of 1000.

May 28, 2014
8:26 am
AltaRed
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Any GIC (whatever the issuing institution) worth less than $1000 would be cashed out. Since this is a conversion from an RRSP to a RRIF, there would have been no portions carved out yet and therefore no 'remains of a GIC' to be considered at that point. And yes, since most institutions would have $1000 as a minimum for a GIC, the comment regarding conversion is a throwaway.

I do not know what happens to carving out of portions of GICs within a RRIF after conversion because I had no interest in an answer to that question.

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