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RRIF withdrawal - Different FI - Different process
August 8, 2017
7:50 am
Norman1
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Loonie said
My understanding, open to correction, is that FIs are required to take the minimum percentage out of every solitary GIC and savings account. The only way around this that I know about is through a trading account in which case you can decide, as the whole trading account is treated as one, no matter how many individual investments.…

Perhaps Norman1 can enlighten us. He is so good about finding the exact rules about things. …

Section 146.3 of the Income Tax Act deals with RRIF's. The minimum amount has to be withdrawn from each RIF. A RIF "means an arrangement between a carrier and an annuitant…"

So, it depends on how the RIF carrier has done things. If the FI has each GIC and each savings account of an annuitant as a separate "arrangement" registered with CRA, then each is a RIF and the minimum has to taken out of each every year. If the FI has all the GIC's and savings accounts of an annuitant in a single "arrangement", then the minimum for the annuitant can be taken out of some of his/her GIC's and savings accounts.

From what Cranston found, it looks like Oaken, Accelerate, and Hubert have a single "arrangement" for all one's RIF GIC's and RIF savings accounts.

August 8, 2017
9:49 am
Bill
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Norman1, the ITA says a RIF is "an arrangement between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant..... the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year......."

So it appears one of the conditions of the arrangement is that at least the required minimum amount is paid out every year. So, never mind the administrative work, I can't see an arrangement applying where all that's held is a non-cashable GIC > one year as there would be no way to pay out the minimum every year. I'm guessing every FI registers each client's RIF as a single arrangement, notwithstanding that there may be different pools of money or accounts within the RIF, but I don't know for sure.

August 8, 2017
12:34 pm
Loonie
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Thanks for checking, Norman - I think!
Is there no clearer definition of "arrangement"? I must admit I have no idea what they're talking about. They might as well be "arranging" the furniture, from my point of view.

August 8, 2017
5:01 pm
Bill
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The ITA does not define "arrangement" for purposes of RRIFs, so normally you would then move to the dictionary definitions of the term. But it's not an issue for consumers because anyone who markets RRIFs has to have had their "arrangements", their RRIF products, first approved by CRA. So if an FI deals in RRIFs you know that CRA, by accepting it as a registered plan, has determined their RRIF product meets the requirements of the ITA.

August 8, 2017
6:29 pm
Loonie
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I'm sure they've met the requirements of CRA. It's just that the consumer doesn't necessarily know whether 2 RIF GICs count as one or two when it comes to mandatory withdrawals. If you have one at 3% and another at 2%, you would probably prefer that the money all be taken from the latter. However, you wouldn't necessarily know about the "arrangement" until you saw it deducted. I don't think most of us would think to ask about his in the first instance. I wouldn't have.

August 8, 2017
6:43 pm
Norman1
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Bill said

So it appears one of the conditions of the arrangement is that at least the required minimum amount is paid out every year. So, never mind the administrative work, I can't see an arrangement applying where all that's held is a non-cashable GIC > one year as there would be no way to pay out the minimum every year. I'm guessing every FI registers each client's RIF as a single arrangement, notwithstanding that there may be different pools of money or accounts within the RIF, but I don't know for sure.

I've updated the wording in my post to be more precise in meaning there will be at least one arrangement per annuitant.

I think it is up to the FI whether (1) each GIC of an annuitant is a separate "arrangement" or (2) all the GIC's of an annuitant are a single "arrangement."

I think it is possible to have a non-cashable GIC, with a term longer than one year, as a single "arrangement" or RRIF.

Minimum withdrawals don't have to be cash withdrawals. They can be in-kind. The GIC could be subdivided each year and one of the parts withdrawn in-kind to satisfy the minimum withdrawal.

A RRIF GIC may not be the same as an ordinary GIC. Cranston's finding about Oaken suggests that their non-cashable RRIF GIC's are not as non-cashable as their regular non-cashable GIC's. If the accrued interest on all one's Oaken RRIF GIC's is not enough to satisfy the minimum withdrawal, then the RRIF GIC with the lowest interest rate will be partially cashed to satisfy the difference! So, a non-cashable Oaken RRIF GIC seems to be non-cashable only above the minimum withdrawals.

August 8, 2017
7:05 pm
Norman1
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Loonie said
I'm sure they've met the requirements of CRA. It's just that the consumer doesn't necessarily know whether 2 RIF GICs count as one or two when it comes to mandatory withdrawals. If you have one at 3% and another at 2%, you would probably prefer that the money all be taken from the latter. However, you wouldn't necessarily know about the "arrangement" until you saw it deducted. I don't think most of us would think to ask about his in the first instance. I wouldn't have.  

I think "arrangement" for RRIF's means either a RRIF annuity contract, a RRIF deposit contract, or a RRIF trust. That is what CRA interprets it to be in Income Tax Folio S3-F10-C1 (Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs).

Yes, for deposit-type RRIF's, one needs to ask if all one's GIC deposits with the FI will be under one RRIF contract and be one "arrangement" registered with CRA or will each GIC deposit be a separate RRIF contract and each be a separate "arrangement".

September 28, 2017
11:09 pm
Loonie
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http://www.fiscalagents.com/ne.....nsco.shtml :
"Some but not all RRIFs allow for unscheduled lump sum withdrawals at any time. If your cashflow needs are uncertain or you just want the extra flexibility, look for companies that offer this option without any penalties."

Does anyone know of FIs that do this and have decent rates - other than Accelerate?

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