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RRSP withdrawal ramifications
June 20, 2020
9:06 pm
Loonie
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Rick said
Like the loophole. Like their rates, but don't deal with Oaken due to their lack of TFSA, RSP & RIF savings accounts.
Is it possible to set up a 5 year GIC ladder within a RIF (other than Oaken), that pays interest out to your RIF savings account either annually or at maturity to cover your withdrawals?  

I don't think it's possible to meet your mandatory minimum this way, due to interest rates being significantly lower than mandatory withdrawal rates. The differential in rates is now about 3 percentage points or more.
So, the first question might be whether they would allow larger withdrawals. If they do, then you also have to allow for the withholding tax in calculating your planned withdrawals.

However, it ought to be possible to set up a system such as you suggest. I've never tried, but I htink I was asked if I wanted to once.

It's certainly an argument for keeping all your RIF GICs in one FI. On the other hand, there is the problem of insurance coverage if you are entirely in GICs. At Oaken, you would only get 200K maximum. I realize you're not interested in Oaken, but one is quite limited with CDIC insurance.

June 21, 2020
6:58 am
GICinvestor
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Rick said
Like the loophole. Like their rates, but don't deal with Oaken due to their lack of TFSA, RSP & RIF savings accounts.
Is it possible to set up a 5 year GIC ladder within a RIF (other than Oaken), that pays interest out to your RIF savings account either annually or at maturity to cover your withdrawals?  

Rick I have to agree with your disapproval of Oakens' policy of no TFSA, RRSP & RRIF savings accounts. While I would say I am quite conversant with the simpler process of TFSA I am not with RRIF as of yet....but will be soon!!! But Oakens' rates at the time were the best and every .25 better I will make the effort to put my money at that highest rate. I SHOULD HAVE NOT LET THE BLINDING FLASH OF THEIR GLISTENING RATES OVERRIDE MY RESISTANCE TO THEIR NO TFSA, RRSP & RRIF SAVINGS ACCOUNTS POLICY. But I have come to a final conclusion with Oaken....NO MORE REGISTERED INVESTMENTS.... my wife and I have discussed moving out all TFSA as I do plan, next year 2021, to invest all TFSA to pay interest annually into a TFSA savings account. And once I do a bit more work on what FIs I would put my RRIF money into I will draw a plan to remove all RRIF funds from both of our Oaken accounts. OAKEN IS GOOD, FOR US, FOR NON REGISTERED ONLY!!!!!!

I have laddered RRIF GICs in Oaken and my wifes' are not and just a lump sum and won't mature for a few years. So for me I will plan to force a payment by moving my matured RRIF to another FI and if that works will phase out using that method. My wifes' RRIF we will hopefully see her payments come from the accrued interest and then, upon maturity, and will ladder her GICs and do same on forcing the payment by moving a matured GIC to another FI if my strategy works for mine first.

It is unfortunate that Oaken does not post how they make up a mandatory RRIF payment and how uninformed their people are to explain it to you. It makes one feel unsure of trust of how your money is managed for a RRIF at Oaken. It is probably ok BUT am I getting the max value out of my GIC??? And then I will have to phone Oaken to find out where the money came from....interest....or principal which I think is ridiculously poor, and they should have a transaction analysis that I can download. And my wife has no use for calling an FI nor does she really understand it all. So before a call is made she has to be brought up to date before hand and then I have to stand by for further reference back up. Is much easier if I can get all the information online for both of our accounts. BUT if I manage my RRIF through Hubert by my management of having funds in the RRIF savings account before my date of mandatory withdrawal I have COMPLETE TRUST of the integrity of every GIC I have there.

PS. I like that Oaken has a no fee transfer option for TFSA, RRSP and RRIF. But it appears to me they have to do a lot of extra work to keep money with them for TFSA, RRSP and RRIF. They mail you a letter asking for further instructions for your upcoming maturity (and I think you can update that online too) and for a recent upcoming TFSA maturity my wife has had 2 calls from Oaken looking for further direction for the funds. They wouldn't have to do that if they had savings accounts.

.PPS Loonie would be correct....interest payments won't make up enough for our mandatory RRIF payment. Until we get back up to the 9% to 18% rates...remember them?? But your idea is still good if you plan to withdraw more than mandatory, then the funds would be waiting for you in your RRIF savings for you and your GIC is still fully intact. And if you did not withdraw it then put the interest only payments that now reside in your RRIF savings into cashable $1000 one year GICs (I would recommend Hubert for that).

Bottom line...Oakens RRIF policies not understood by Oaken Specialists or the consumer and are NOT flexible.

June 21, 2020
2:14 pm
cruzinalong
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You probably should not be concerned if an FI has a savings account in a TFSA/RSP/RIF. When you put money into these accounts what did you do with it? I would say invest it immediately. When I started RSP, the minimum was $100 GIC. I bought a GIC. 1-5 year common then. Never had a savings account then. Why bother. The rest of my pay went for bills. If they withdraw from the lowest rate GIC it is fine. Years ago I cashed GICS in RRSP. I did it when interest rates were at historical highs. All the GICS I had were paying less than the all time high. Why did I do it? Probably to pay off loans that I was charged more than GICS were paying. When I transferred funds to stock market, I setup a money market fund. Not sure when I cancelled this money market fund. I cancelled, I never collected any interest except pennies.

June 21, 2020
2:45 pm
Loonie
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cruzinalong, I don't think you understand the need for registered savings accounts.

Espcially for RIF, but also for the others, they are necessary for at least two reasons.
1. For RIF, and sometimes RSP, if you are planning a voluntary withdrawal for tax purposes or other reasons, you often don't know how much you will need until late in the year, so you need somewhere to park the money after the GIC matures. This can also apply to TFSA if you want to cash it in December and reinvest in January so as to avoid a transfer fee.
2. When a GIC matures, you may not want to reinvest it immediately, especially if you are anticipating better rates, so you need somewhere to park it until you make up your mind or have time to review all options. Timing isn't always right.

By forcing our hands, Oaken leaves some of us no choice but to transfer out. They could be losing out on a possible reinvestment entirely. Once the money leaves, it may never come back.

I agree though that Oaken is great for non-registered - heck, they even have a non-registered savings account! So it's clearly not just an oversight to not have registered savings. They are deliberately making it difficult for us to manage our money the way we want.

I have started transferring my registered GICs out of Oaken as well.
My only hesitation is in terms of who will manage my money when I am no longer able to do so. They will not wnt to hunt around for bter rates. Oaken does offer consistently decent rates for those who don't want to actively mange their money, so it might be better to stay there for that reason only.

June 21, 2020
4:26 pm
cruzinalong
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Thank you for response. I do not have GICs in my RSP.
Point 1. My RSP withdrawals are for specific purposes. Money for urgent needs. I work out how much after withholding tax I have. The withholding tax is more than I pay in the spring. I put my tax refund in savings account in spring. I leave it there until I need it. My taxable income goes up and down yearly because of this process.

Point 2. I am merging my non-registered GICS. When GICS mature this year I put the funds in a savings account (i.e. currently 1.75%). I am planning to purchase one GIC annually. I have picked one month for this purpose. I will buy a 5 year GIC. About 20% in each 5 year GIC. I currently have no plans to increase the amount in GICS. Maybe when I withdraw minimum amount annually from RIF. Enjoy the summer.

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