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Email this12:42 pm
December 18, 2024
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Is this standard?
My RRIF payment is based on my banks rules…of what GICS are selected to take the payments from. And that’s ok. And of course the % based on my age.
I discovered that they pulled my payment from the principal only of a few of my GICS.
Some showed the amount left (pure interest only) and some interest only balances simply don’t show on my account.
If the accrued interest was taken, they could have taken less principal from one of the GICS and I wouldn’t have this piddly small amount GICS to deal with.
I now have 4, less than $100 GICS that apparently need to wait for maturity 2 and 3 years away.
1. Is that the norm to pull principal only….or wipe out the GIC with principal and accrued interest?
2. The less than $100 GICS ….what am I waiting for? Will they renew that small amount as a GIC?
3. Should I be allowed to withdraw those 4 piddly amount GICS at the accrued value? Or putting it another way, would you want to withdraw the piddly amount GICS left?
1:23 pm
October 27, 2013
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My view is a FI would try to fund the withdrawal amount from as few holdings as possible, i.e. not firstly accrued interest across all GICs and then principal from one GIC to fund the shortfall. There is no reason for a FI to go to the effort of additional administration to look for accrued interest across multiple holdings.
Why not manage (and control) this on your own by strategically investing in a GIC ladder whereby enough GIC(s) mature each year to actually fund the minimum annual withdrawal?
3:23 pm
November 21, 2015
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GIC-fanatic, you write, that "My RRIF payment is based on my banks rules...".
What I did with my RRSPs is, that I requested, in writing, where the withdrawals should be coming from and I sought a conformation of that. Which I received and thus the withdrawals are coming only from one RRSP, thus eventually getting rid of it, before I touch the other ones. All with the same FI.
5:45 pm
November 18, 2017
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I concur: give your financial institution orders on where to take the mandatory withdrawals. I did.
AND - note that those mandatory withdrawals have set time limits: I don't remember them all but they can't be done between December 15th and year-end.
RetirEd
6:32 pm
December 18, 2024
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@AltaRed. Your idea is good. And I probably did not plan well. But when I did the ladder….some years had a low rate so the ladder won’t always work the way I would like to see. And also the policy at the FI level can be changed create havoc for the customer’s plan. And yes the ease and complication will be controlled by the FI. Not making excuses and will see how well I can bring my 3 year ladder in line.
@Julio. Great idea and will consider.
@RetireD. Directing the withdrawal from specific GICS is a good idea. The withdrawal dates … maybe based on the FI. I believe someone posted about buying TFSA’s in late December would be denied….but upon confirmation at one of my FI’s I was advised all was ok up until the last day of year that they were open.
So great ideas to work on!
But what do you think about under $100 GICS that don’t mature until 2 or 3 years?
Also finding that some FIs let incompetent employees deal with issues that are out of their pay grade that just adds gasoline to the fire, leaving the customer more doubtful.
7:24 pm
October 27, 2013
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GIC-Fanatic said
But what do you think about under $100 GICS that don’t mature until 2 or 3 years?
You are always going to run the risk of a very small GIC residual if the decision making is left to the FI which will apply their specific algorithm 'to the dollar'. Why not control it by placing that 'small' GIC first in line toward next year's withdrawal requirement?
7:43 pm
December 18, 2024
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AltaRed said
You are always going to run the risk of a very small GIC residual if the decision making is left to the FI which will apply their specific algorithm 'to the dollar'. Why not control it by placing that 'small' GIC first in line toward next year's withdrawal requirement?
Because I am afraid of their not using “interest” for my RRIF payout. But I will ask…and ask to pull out as an extra payment.
7:58 pm
October 27, 2013
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GIC-Fanatic said
Because I am afraid of their not using “interest” for my RRIF payout. But I will ask…and ask to pull out as an extra payment.
What difference does it make? A dollar of interest is no different than a dollar of principal in a compound interest GIC environment. Future interest is earned on accrued interest AND principal.
I would think you would be indifferent with perhaps one exception when residual principal is no longer large enough to renew into another GIC.
11:03 am
April 6, 2013
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There is a bit of difference: Accrued interest does not earn interest until it is compounded.
2:25 pm
November 18, 2017
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GIC-Fanatic:
@RetireD. Directing the withdrawal from specific GICS is a good idea. The withdrawal dates … maybe based on the FI. I believe someone posted about buying TFSA’s in late December would be denied….but upon confirmation at one of my FI’s I was advised all was ok up until the last day of year that they were open.
Let's not get people confused between TFSAs and RRIF/RRSP withdrawals. Anyone can put funds in a TFSA or TF-GIC at any time the financial institution is open; the only issue is whether they can get it registered in the correct year.
I was specifically calling attention to the restriction on RRIF withdrawals in the last weeks of a year, after December 15th. Other than that, one can make the transaction whenever within the year one wants to. Obviously, the longer one's cash stays in a tax-free interest-bearing state, the better.
RetirEd
7:11 pm
March 15, 2019
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The problem with waiting until December 15th to make the withdrawal is that if there is a glitch there is literally no one around to fix it because Mid to late December is a heavy statutory holiday and vacation period. This happened to me one year and I'm still not satisfied that it was properly fixed.
7:38 am
October 27, 2013
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Those can be potential issues with customer initiated withdrawals, i.e. interaction of the customer with the account where the FI needs to then react/respond.
If automated, it should not be an issue. Spouse, ex-spouse and I have our RRIF minimum annual withdrawals automated with our discount brokerages. I have my MAR scheduled for Dec 15th and my ex has hers scheduled for Dec 24th and there has never been a glitch. Our only obligation is to have enough cash in the account at the time to fund the MAR.
12:17 am
November 18, 2017
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If the RRIF withdrawal is pre-booked, it will happen. If it isn't and no request is made, the financial institution should pull the minimum on the 15th of December. I don't know where they'd choose to put it.
RetirEd
