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recent RRIF discussions under "General comparisons"
July 14, 2020
9:51 am
Alexandra
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Unless you want a specific amount of funds coming out of your RRIF each year, instead of under the minimum withdrawal rule, then what most banks do is they take the lowest paid GIC interest with them and take the minimum out of that.

So if your lowest paid GIC is for $20K at 1.85%; and minimum withdrawal is 5.4%, they will take $370 out of the $20K and the remainder of that GIC goes on until maturity. The other higher interest GICs remain the same. This is how I do mine as I want the minimum withdrawal each year as of now.

July 14, 2020
10:24 am
Londonguy
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Alexandra said
Unless you want a specific amount of funds coming out of your RRIF each year, instead of under the minimum withdrawal rule, then what most banks do is they take the lowest paid GIC interest with them and take the minimum out of that.

So if your lowest paid GIC is for $20K at 1.85%; and minimum withdrawal is 5.4%, they will take $370 out of the $20K and the remainder of that GIC goes on until maturity. The other higher interest GICs remain the same. This is how I do mine as I want the minimum withdrawal each year as of now.  

I'd consider that pretty good service if your bank does all that for you passively in the background. What FI does this for you?

In my own case, I have a self-directed RIF at TDDI -- it doesn't have any GICs in it, but among other things I do maintain an ISA balance (but never any outright cash). I'm on a quarterly payout, and without any action by me the bank issues a payment around the 15th of Mar/Jun/Sep/Dec. However, they don't correspondingly sell anything in my RIF to offset the payment, which requires me to remember to go into that account and sell enough of the ISA holding to cover the debit.

The first time this happened I didn't know what to expect and I also didn't want to duplicate anything, so I waited and waited for an automatic liquidation to show up but it never did. Two weeks later I just covered it on my own. Then a few weeks after that I got a form letter in the snail mail telling me I had a debit balance in my RIF and would I please address it, but it was old news at that point.

I'm now self-trained to take my own action quarterly in that account, but it was a bit unnerving at the time seeing a lingering negative cash balance in a registered account and wondering who was supposed to fix it

July 14, 2020
10:55 am
Alexandra
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I have RRIFs with Oaken, Tangerine,Canadian Western Bank & CIBC.

Oaken, Tangerine & CWB all do it. Probably CIBC as well but I have only the one small RRIF with them so the minimum comes out of that.

Also, you can change your payout date. You have to sign a form with CWB though but not the others. I have only had two years of RRIF payments and both years I had them pay out in January. However for next year, I have changed the payout to the end of December 2021. I did this because the interest is pretty good in them all, so I may as well get the extra 11 months.

July 14, 2020
11:17 am
Kidd
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Outlook does the same. First they depleted all of my cash in their high interest rrif savings account before turning to my GICs. Seeing this, at first i questioned (internally) what's happening here? But fiscally, it was beneficial to me, to do it this way.

July 14, 2020
11:21 am
Norman1
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Londonguy said

I'd consider that pretty good service if your bank does all that for you passively in the background. What FI does this for you?

In my own case, I have a self-directed RIF at TDDI -- it doesn't have any GICs in it, but among other things I do maintain an ISA balance (but never any outright cash). I'm on a quarterly payout, and without any action by me the bank issues a payment around the 15th of Mar/Jun/Sep/Dec. However, they don't correspondingly sell anything in my RIF to offset the payment, which requires me to remember to go into that account and sell enough of the ISA holding to cover the debit.

I'm now self-trained to take my own action quarterly in that account, but it was a bit unnerving at the time seeing a lingering negative cash balance in a registered account and wondering who was supposed to fix it

The brokerage RRIF's are set up differently than the deposit RRIF's at a bank or credit union.

The brokerage RRIF's don't automatically sell something because they allow one to choose what to sell to cover the cash RRIF withdrawal from the free credit balance of the RRIF.

Brokerage RRIF's also allow one to do in-kind withdrawals. Instead of selling an investment, one can withdraw the investment itself and continue to hold it in a non-registered account afterwards. It is an option after a market downturn should one need to make a withdrawal but doesn't want to sell. TaxTips.ca: Making "In Kind" Withdrawals From an RRSP or a RRIF has details.

July 14, 2020
1:06 pm
Londonguy
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Norman1 said

The brokerage RRIF's are set up differently than the deposit RRIF's at a bank or credit union.

Knew about the in-kind thing, but didn't know about the "no automatic settlement" thing.

It's not a big deal, it's just that I didn't expect it. The TD rep I had to deal with when I set up the RIF never mentioned anything about payment settlements one way or the other.

In any event, my account my responsibility

July 14, 2020
1:21 pm
Alexandra
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Hi. Yes, the banks will take the first money if there is enough in the RRIF DISA.

Otherwise on paper they put the lowest interest RRIF GIC into the DISA , take the minimum amount of funds out of that account, then put the remainder back into the GIC until the next time.

So, if your DISA had $200 in it and you lowest interest GIC is at $20K, they put the $20K into the DISA, now you have $20,200 in the DISA. Then they calculate the 5.4% of all your GICs plus the amount in your RIF DISA ....say the total of them is $102,200. So they would pay out to you in your regular savings account the amount of $5,518.80. Then the remainder of $1468.12 would go back into the GIC until next time. Next year the min. withdrawal would come out again from that GIC unless one of your other RRIF GICs came due in the interim and it was re-invested at the lowest rate of all of them.

July 14, 2020
2:37 pm
dougjp
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Alexandra, CIBC does that too, my wife has her RRIF there, with (what will eventually be) laddered 5 year GICs. It works as described and seamless. The only downside is the GIC rates she is given, which are awful of course.

I have a brokerage RRIF, don't use the minimum and also insert a tax withholding amount that I figure out each year. The whole thing is a pain....luckily its only once per year. They insist in cash that is settled in, and visible as such in, the cash account before doing anything. For example I have to sell Renaissance HISA which then takes 2 days to settle, plus this year an additional day to "appear" in the account (probably because of Covid remote staffing limitations) before I could give them instructions. Also I have to make sure the following year's withdrawal date, which they automatically set as the same as the current year's date of withdrawal, isn't too soon for me.

July 14, 2020
5:59 pm
AltaRed
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Discount brokerages are simply order takers. It is up to the account holder to manage the account, as in DIY, and make the decisions on the RRIF withdrawal, when it is withdrawn and whether any tax is withheld.

The brokerage's only obligations are to ensure the annual minimum is withdrawn and to report to CRA.

Anecdotally, I have been told that in the event the account holder does nothing, the brokerage will make the decision on what to sell to get enough funds for the withdrawal. Likely charge agent assisted commission rates as well.

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