RSP GIC does not mature until I am 73 | GIC discussions | Discussion forum

My guess, for what it’s worth: the bank/broker would automatically redeem the amount you have to withdraw at no cost to you.

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Dommm . . .

You can ask your question here and get All Sorts of Answers/Guesses,
or ... you can talk 'Directly' to the FI, and get the Full/Correct Scoop.

It's Your Call . . .

LOL

Dean

That depends on how the RRSP and the RRIF are set up.

RRSP's and RRIF's can be set up as a depositary contract, as a trust, or as an insurance contract. The GIC's in a contract RRIF can have special fine print that allows early access to principal and even accrued interest for RRIF withdrawals. There would not be a problem after one converts the contract RRSP GIC to a contract RRIF GIC.

Not the case with a RRIF that is set up as a trust like the ones at brokerages. Those RRIF's hold GIC's that are non-registered. The registered status comes from the RRIF trust and not from the GIC's themselves which have no special fine print to allow early access to principal or accrued interest for RRIF withdrawals. RRIF trustee to-be could refuse to accept the transfer of such an RRSP unless the annuitant contributes some cash to the RRSP or transfers cash from another RRSP or RRIF to provide the liquidity needed for the first minimum RRIF withdrawal.

Some financial institutions, like ICICI Bank, don't do RRIF's. One is forced to break the RRSP GIC early with penalty and transfer to a RRIF elsewhere.

dommm said
I have a 5yr GIC held in an RSP account. This RSP account only holds this GIC & nothing else. This GIC will not mature until I am 73yrs old... 

It sounds like you have more than one RSP account. As long as you can withdraw the minimum required RRIF amount each year from any RSP/RRIF account, you should be fine.

Unmatured RSPs can be contributed into a RRIF as is.

I don't think FIs would allow withdrawals from a locked GIC. If they do, you most likely would lose all accrued interests plus a penalty.

If you tell us which FI has your GIC, we might give a better answer.

That said, spouse and I had a few RSPs with GICs at various banks/CUs, and Indeed, they were almost too willing, they all were ready to automatically convert them to RIFs and then automatically make the required mandatory withdrawal and send it to CRA without any intervention from us. and at least one of them (Tangerine) did not appreciate our intention to direct the conversion ourselves.

My suggestion is to start this process early in the year in which you turn 71. Approach your FI and tell them you want to convert the RSP to RIF. If you take the initiative, you will be able to make the following choices: 1. whether to make the rates of mandatory withdrawals based on your own age or spouse's age; 2. choose when during the year, you want that withdrawal made; and 3. choose whether you want the mandatory withdrawals to start in the year you turn 71 or in the year you turn 72. Otherwise, the FI may make these decisions for you without discussing them.

SaverJunior said

It sounds like you have more than one RSP account. As long as you can withdraw the minimum required RRIF amount each year from any RSP/RRIF account, you should be fine.
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Can't do that. Each RRIF has to pay out at least its minimum each year. That's what defines a RIF in Income Tax Act 146.3 (1):

Definitions

146.3 (1) In this section,
…
registered retirement income fund means a retirement income fund accepted by the Minister for registration for the purposes of this Act and registered under the Social Insurance Number of the first annuitant under the fund; (fonds enregistré de revenu de retraite)

retirement income fund means 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 (and, where the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), 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, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment. (fonds de revenu de retraite)

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... 'DITTO' To That ⬆

Dean

I didn't know that, Loonie. I've seen fees for full withdrawal of RRIF, but which discount brokers are you referring to re charging a hefty fee to withdraw a partial amount if it's greater than the mandatory RRIF annual minimum?

Questrade will charge for a “partial transfer of account to another institution” if you fill in the transfer form at another brokerage. Certain transfer methods, like wire transfer would incur fees. But they won’t charge for a standard RRIF withdrawal over the minimum. WS won’t charge either.

Thanks for the input, AltaRed and mordko. That's my understanding too, to date I've not seen any evidence to support the suggestion made in post #15 that RRIF partial withdrawals in excess of the minimum amount for the year could incur a hefty fee from a discount broker. Transfers or account closures are another matter.

Usual fees are not a big deal to me but I'd certainly want to know about any hefty ones before I start withdrawing from a RRIF, I plan to take out irregular amounts whenever I feel like it, not just the mandated minimum amount every year.

A review of TD Direct Investing fees info yielded no mention of such a fee, at least that I could see.