Can a RRSP GIC be converted to a RRIF during the term? | GIC discussions | Discussion forum

Yes, it can be done. And it must be done if you are turning 71, by law.

However, if you want to do it at a younger age, at your option, it will be up to the FI whether they are willing to do so. They may not be willing

How it works: they simply open an RIF, and move the funds from the RSP GIC to an RIF GIC for the remainder of the term. Then proceed according to RIF rules and individual company policy on withdrawals.

RetirEd said
Will this work even if the RRSP has not yet matured?
RetieEd  

By law by the end of the year in which you turn 71.

Yes you can. But how old are you?

But the question is......if you are under 65.....can you receive an annual payment?
See chart here. https://www.woodgundy.cibc.com/en/reference/retirement-planning/rrif-minimum-withdrawal.html

All of my RRSP $ was in GICs.

I started pulling money out of my RRSP probably around the age of 60. I took money from matured funds and reinvested the rest. No matter what it’s taxable in the RRSP and RRIF form.

You can take at maturity or have interest pay out annually and withdraw the interest.

At age 71 you are forced to change over to RRIF and likely each FI has a different way of handling it. I can only tell you how Oaken does it.
Some FI’s do it automatically and sometimes you are responsible to initiate and have heard some just cash in your RRSP and you get heavily taxed.

Before you change, keep in mind the successor for your RRSP does NOT carry over, so you need to set up a successor for the RRIF. Also know the rules used for what GIC is withdrawn from for the mandatory payments.....is different at every FI.

Rail Baron said
There is another option for RRSPs at age 71, and that is converting them to a life annuity. One gains security, plus never having to worry about the minimum RRIF withdrawal amounts, which change each year for the rest of one's life. Instead, a payment from the insurance company is made monthly for the rest of one's natural life.

I have not made up my mind on which way to go when that day arrives for me, but I am by no means wedded to the RRIF path.  

Good Point!!!

The "other" option.

For some reason I don't like the idea of dealing with a Life Insurance Company. And how does an annuity payout for successors? In full or a %?

I am in my early 70's and retired at 55 and I have never used my RRSP or Severance Pay (golden retirement handshake).

My RRIF/TFSA continues to grow larger and larger. When I first began to withdraw RRSP is was to control the amount taxed "if" it went into my estate. So I have been pulling RRSP/RRIF out and moving too TFSA every year.

RRIFS are in highest rate with a bit of laddering. TFSA are pretty much evenly in 5 years ladders. And I am building "first to use" TFSA GICS that are $1000 in 1 year GIC's and are pure interest only.

If you are considering annuitizing an RIF, it is perhaps worth remembering that you don't have to do this at 71.
You can, if you wish, convert to RIF, keep GICs or whatever for some time, then convert to annuity when it benefits you to do so, typically by age 80. You can also convert some, but not all, to annuity.

Most with knowledge in this area seem to recommend you stagger your purchases, beginning age 73 to 75, assuming you are doing it for income security.

Gordon Pape, who wrote many books on retirement planning, once suggested that you might want to wait to about age 80 if you are in good health. This enables you to get a much better rate for the years you have left and also gives you better control of the income tax impact while you are alive as you can spread out a steady return and avoid the high mandatory withdrawals in the latter years. That advice was quite a few years ago. Pape is now 87 and still working in this area!
There are a lot of considerations, and it depends on individual circumstances.

Actually at age 70 life expectancy for males is about 83, females 87, I believe, so lots more than 1% will get to 85.

Oh, I see.

The financial institution may not allow one to buy an RRSP GIC that matures later than a year after one turns 71.

If allowed, the institution may require the GIC to be transferred to a trusteed RRIF and the minimum withdrawals made in-kind and not in cash.

One needs to ask the RRSP GIC issuer how it handles this situation of its RRSP GIC maturing later than when the RRSP itself must mature by.

One also needs to check if the financial institution can administer the LIF or LRIF required when the time comes, if one has a locked-in RSP.

Oaken warns in its Retirement Savings Plan terms and conditions that it cannot and one will need to transfer the locked-in RSP elsewhere:

10.11 Locked-in retirement accounts

If the Plan [Home Bank retirement savings plan] is a “locked-in” plan or similar arrangement governed by any Applicable Law regarding pensions, you must sign an Addendum that contains terms relating to the pension legislation.
…
If locked-in assets have been transferred to the Plan in accordance with applicable pension legislation, such assets cannot be transferred to life income fund or locked-in retirement income fund, because we and our affiliates do not administer such funds.