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Transfer Fees and T4RSP Slips
November 13, 2015
2:19 pm
frizun
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I transferred some RRSP funds from Outlook Financial to another CU.
Outlook took a $50 fee from the account before transferring the rest of the funds.
So do I get a T4RSP slip for that $50,or is that not considered a RRSP withdrawal?

November 13, 2015
2:28 pm
kanaka
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It is a $50 loss in your RRSP account. So no T4RSP for you. Not sure of the mechanics as to how the financial institution reports the tax or income.

You can transfer cash and investments between RRSPs you hold at the same or different financial institutions. Tax will not be withheld if the transfer is made directly by the financial institution. One or both of the financial institutions involved may charge you a transfer fee.

Amounts you transfer directly to your RRSP do not affect your RRSP deduction limit.

Since you can no longer make gains on that $50 to me it would make more sense to have the option to pay the $50 fee from a non-registered account.

November 13, 2015
4:05 pm
AltaRed
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It is similar in reverse. If the receiving institution reimburses you for the transfer fee and deposits $50 into your account, it is not considered a RRSP contribution. It needs to be handled in the same fashion both ways to prevent people from gaming the system.

Similar case in non-registered accounts. Transfer out fees are not deductible expenses and reimbursement of fees by the receiving institution is not considered taxable income.

Nice, clean and simple.

November 13, 2015
7:33 pm
frizun
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OK I see now,Outlook took the $50 fee from the RRSP because they knew the other CU would reimburse the $50 at the other end.
So if there was no reimbursement coming,Outlook would probably have expected the fee to be paid from a different source.
The funds haven't shown up at the new account yet,but I assume $50 will be put in the new RRSP.
Thanx for the education.

November 13, 2015
10:48 pm
kanaka
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frizun said

OK I see now,Outlook took the $50 fee from the RRSP because they knew the other CU would reimburse the $50 at the other end.
So if there was no reimbursement coming,Outlook would probably have expected the fee to be paid from a different source.
The funds haven't shown up at the new account yet,but I assume $50 will be put in the new RRSP.
Thanx for the education.

Hi. It does not work that methodically!!! Does the CU you are transferring to, offer an amount to transfer in? Some do, some don't, and some do if you ask.
Ie. Manulife charges $150 to transfer out
Ie. Oaken has no transfer out fee so no transfer in enticement
Ie. I believe PT is same Oaken.
Ie. Some only offer the enticement for the first transfer in.

Make sure you ask before you start the transfer.

Keep in mind you may want to minimize how many institutions you have RRSP funds in, when it comes to converting them to RRIFs.

Ps. I am moving everything out of OF too.

November 14, 2015
7:50 am
frizun
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The other CU does offer reimbursement of the $50 transfer fee.
But if there was no reimbursement of the fee,are you saying that Outlook could still have taken the transfer fee from my RRSP without giving me a T4RSP?
I wouldn't mind if they didn't do that...........but the Taxman might.

November 14, 2015
9:04 am
kanaka
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frizun said

The other CU does offer reimbursement of the $50 transfer fee.
But if there was no reimbursement of the fee,are you saying that Outlook could still have taken the transfer fee from my RRSP without giving me a T4RSP?
I wouldn't mind if they didn't do that...........but the Taxman might.

So luckily, no change and hopellfully better service and rate for you. Yes OF will take $50 and no T4RSP. What happens between financial institutions does not always include CRA involvement.

"If" you were charged a withdrawal fee and you expected a T4RSP and the transfer to institution gave you an incentive...then that should have been considered a "contribution"?? Don't be confused with the transfer fee and incentive being the same amount. It could have been $0 transfer fee and $100 incentive or some other variation.

Ie. Any one that uses an adviser for RRSP will pay annual fees from the RRSP proceeds.....and never trigger a T4RSP.

November 14, 2015
11:53 am
AltaRed
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frizun said

The other CU does offer reimbursement of the $50 transfer fee.
But if there was no reimbursement of the fee,are you saying that Outlook could still have taken the transfer fee from my RRSP without giving me a T4RSP?
I wouldn't mind if they didn't do that...........but the Taxman might.

As already said by others, the two are not related. Each institution decides what it will charge for a transfer out and that fee is taken out of the RRSP (no T4RSP). The receiving institution may, or may not, choose to reimburse all, or any, of the transfer out fee, but to the extent it does (via offer or by negotiation), it will be reimbursed within the RRSP (no T4RSP).

The same is generally true for non-registered accounts. Transfer out fees are not tax deductible as 'carrying costs' or 'investment fees' and likewise, incentives at receiving institutions are not charged as income (often listed as something like a negative administrative fee or similar). No record of an incentive on the Annual statement of income and expenses from the broker and no T5.

November 14, 2015
1:04 pm
Loonie
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Does one never have a choice, then, about whether the fee will come out of the RSP or out of pocket? I thought I read somewhere that one should ask to pay it separately so as to keep the RSP intact (assuming no reimbursement). Is that not possible?
(I've not yet ever done this, but will be soon.)

November 14, 2015
1:53 pm
AltaRed
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Loonie said

Does one never have a choice, then, about whether the fee will come out of the RSP or out of pocket? I thought I read somewhere that one should ask to pay it separately so as to keep the RSP intact (assuming no reimbursement). Is that not possible?
(I've not yet ever done this, but will be soon.)

In recent years (last decade or so), I've not heard of that option being available. However, to the extent one has another account with that same institution, it may worth asking. But it won't help if you don't have, for example, a non-registered account with the same institution.

November 14, 2015
2:27 pm
wayne dustin
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Frizum next time you transfer a RRSP suggest to the institution you are transferring the money to that you expect them to pick up the transfer fee. You will be surprised how many are willing to do it, even the larger banking systems. I even had some credit unions do this for me. Cheers

November 14, 2015
2:56 pm
Norman1
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Loonie said

Does one never have a choice, then, about whether the fee will come out of the RSP or out of pocket? I thought I read somewhere that one should ask to pay it separately so as to keep the RSP intact (assuming no reimbursement). Is that not possible?
(I've not yet ever done this, but will be soon.)

I think that choice was for the annual administration fee of self-directed RRSP's.

November 14, 2015
7:29 pm
Loonie
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Oh, yes, I think you must be right, Norman. I had forgotten that.

I'm going to have to figure out a chain whereby I can ask one bank to reimburse the exit fee from another until I get it down to one!

Do you have to prove to the receiving institution that you were charged a transfer fee by the previous one,or is it obvious to them somehow?

November 15, 2015
10:07 am
Norman1
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Yes, one does have to show the receiving institution how much the RRSP transfer-out fee was. Last time I did an RRSP transfer, I remember being asked by the receiving institution for that.

I suspect the receiving institution receives a cheque and something like a T2033 Direct Transfer form. So, it is not obvious to them. Area III of that form just has the dollar amount; details about the spouse, if any spousal contributions were made to the RRSP; and the pension act the RRSP is locked in under, if the RRSP was a locked-in one.

November 15, 2015
10:20 am
wayne dustin
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What I have done for several years is that I asked that the financial institution where I am removing the RRSP to take the money out of my account, I always leave a little amount in the account just in case I want to return some day, then print my statement (black out the various transactions that are not applicable) give the new institution a copy and they put the the amount in an account I opened up with them. The only downfall if any is that I have a number of small accounts usually no more than $5.00 at s several banks or credit unions, but I am always welcomed back.

November 15, 2015
10:30 am
AltaRed
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Norman1 said

Yes, one does have to show the receiving institution how much the RRSP transfer-out fee was. Last time I did an RRSP transfer, I remember being asked by the receiving institution for that.

Indeed. I've always provided the new institution with a fax'd (or mailed) copy of the last statement from the outgoing institution which has the transfer out fee shown on it. IOW, it takes a month or two to have a credit shown in your new account. No big deal.

November 18, 2015
11:05 am
frizun
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kanaka said

frizun said

The other CU does offer reimbursement of the $50 transfer fee.
But if there was no reimbursement of the fee,are you saying that Outlook could still have taken the transfer fee from my RRSP without giving me a T4RSP?
I wouldn't mind if they didn't do that...........but the Taxman might.

So luckily, no change and hopellfully better service and rate for you. Yes OF will take $50 and no T4RSP. What happens between financial institutions does not always include CRA involvement.

"If" you were charged a withdrawal fee and you expected a T4RSP and the transfer to institution gave you an incentive...then that should have been considered a "contribution"?? Don't be confused with the transfer fee and incentive being the same amount. It could have been $0 transfer fee and $100 incentive or some other variation.

Ie. Any one that uses an adviser for RRSP will pay annual fees from the RRSP proceeds.....and never trigger a T4RSP.

OK,so transfer fees are not considered RRSP withdrawals...got it.
But I'm still amazed people are allowed to pay fees with untaxed money.
These transfer fees are small potatoes,but advisor fees could be in the thousands of dollars.

November 20, 2015
7:49 pm
Norman1
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frizun said
...
OK,so transfer fees are not considered RRSP withdrawals...got it.
But I'm still amazed people are allowed to pay fees with untaxed money.
These transfer fees are small potatoes,but advisor fees could be in the thousands of dollars.

That not surprising. Outside of an RRSP, any investment counsel fees paid are deductible on Line 221 (Carrying charges and interest expenses).

March 23, 2022
3:56 pm
pcs
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Sorry for bumping an old thread, but from #3 above (and elsewhere in this thread):
https://www.highinterestsavings.ca/forum/rrsps-and-rrifs/transfer-fees-and-t4rsp-slips/#p16098

"Similar case in non-registered accounts. Transfer out fees are not deductible expenses " ...

Is there a specific reference for this point ? i.e. a CRA document reference, or even an Income Tax Act reference, for the non-deductibility of transfer-out fees in NON-registered accounts ?

I understand the discussions in this thread about registered accounts, and the symmetry point about gaming the system re transfer-out-vs-transfer-in fees.

On this CRA page:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22100-carrying-charges-interest-expenses.html
they state that
... "fees to manage or take care of your investments" ... (other than registered accounts)
are indeed deductible, but it's not clear to me whether/how that language EXcludes transfer-out fees.

(And BTW : since this thread started off about registered accounts, I'll happily kick off a new thread for this question if desired.)

Thanks in advance for any enlightenment.

March 23, 2022
4:23 pm
Loonie
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Why would you be paying a fee to transfer non-registered funds?
Are you talking about wired transfers? That's the only time I've ever paid a fee, rarely used.

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