Short Term vs. Long Term GIC's | Page 2 | GIC discussions | Discussion forum

As already mentioned, FIs are awash with deposits and lack of loan growth so far. Unless something 'revolutionary' happens, I can't see short term interest rates going anywhere but lower.

I have trouble understanding why 5 year GIC rates are still where they are at given GoC5 yields (<0.5% for months).

SOME banks continue to offer above-GIC HISA rates. They are either finding something to do with it or internationally going broke. And if you pay a superior rate, the money is more likely to stay in the account. Peoples Trust followed this strategy for years with its high TFSA HISA rate of 3$..

If your financial plan states that you will use a five year GIC ladder, then, in my opinion, you should not be swayed by current speculation about where rates may go. The point of adopting the strategy has not changed, namely to average out the rates over time at what is usually the best rate at the time. Historically, this has usually proven to be the best strategy, and, as for the future, we simply don't know.
Most people don't have a clear detailed financial plan. Start there and don't waste time trying to read the tea leaves.
If you truly believe that the sky is falling or that the most glorious Spring in decades is right around the corner or if we start to see rate inversion or your personal situation has changed significantly, then by all means update your plan, but have one and use it.

If you are going to be that detailed, you should probably programme in any transfer fees as well. Add $25 for good measure as those fees go up regularly and you have no control.

My calculations have shown that for smallish TFSAs (~6K) or even more, especially on shorter terms, reduces the effective rate significantly. You need to do your own calculations for principal and term to see if the effect of a transfer fee makes the rate unattractive.

No, it is still $30,000 that must be paid by the existing RRIF.

The T2033 transfer form only allows assets in excess of the minimum withdrawal to be transferred:

2. For a transfer from a RRIF

Except for enough property to pay me [the annuitant] the minimum amount this year, please transfer, tick one box:

☐ all of the property, or
☐ part of the property in a one-time payment, enter the amount of the payment $_______

I request the transfer of the amount above, which represents all or part of the property of my RRIF identified in Part A, tick one box: ☐ in cash, or ☐ in kind.

In Section III, the transferor financial institution agrees to be responsible for paying out the minimum RRIF withdrawal for the year:

1. We have transferred $______ from the RRSP, RRIF, SPP, or PRPP identified in Part A of Section I to the transferee named in Part C of Section I. If the RRIF property is transferred to another RRIF, RPP or PRPP, we have paid or will pay the annuitant the minimum amount for the year.
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topgun said
My understanding is if you transfer part of a RRIF to another FI you must have the minimum withdrawal before the funds are transferred. Say RRIF is $500,000. Assume the withdrawal percentage is X%. Minimum withdrawal $500,000 x X%. Transfer $250,000 to another FI. Must withdraw $250,000 x X%. Transfer amount $250,000 - $250,000 x X%. The rules changed over the years.
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Not sure where that comes from. One doesn't need to withdraw $250,000 x X% to transfer $250,000 out of an existing RRIF.

If the minimum withdrawal for the year is $500,000 x X%, then one just needs to leave behind $500,000 x X% less any RRIF withdrawals already made in the year from that RRIF. That way, any of the required minimum not already withdrawn can be withdrawn from that RRIF later in the year.

There is no minimum withdrawal required from a RRIF in the year that it is opened. That includes any RRIF opened past age 71 and funded by transferring from another RRIF.

That not what Norman said exactly, but the wording is confusing.
You wouldn't have to take a mandatory withdrawal when opening a new RIF anywhere at any time.
However, the FI from which you are moving the RIF is obliged to take out the mandatory amount before they transfer it out, beginning the year after you convert your RSP to an RIF, i.e. no later than age 72.
In other words, it comes out once in every calendar year, beginning the year after conversion, whenever that may be. You can't just hop from one to another attempting to avoid it.

Nothing has to be paid out before an RRIF transfer unless the transfer is happening on December 31.

The requirement is that there has to be enough assets left behind in the RRIF to cover any remaining withdrawals needed afterwards to reach the required minimum withdrawal for the year.

Let's say you are moving your RIF from FI A to FI B.
FI A mails it out on Dec 31 2020 or a bit earlier. Their obligation is to make sure the mandatory withdrawal for 2020 has been done before they send it off to B. So, if it was not done earlier in the year, they must do it on Dec 31.

When it arrives at B, B's obligation is to ensure that the mandatory withdrawal required in 2021 is made. This is based on the value of the RIF as of Dec 31 of the previous year, which is the same amount as Jan 1 of 2021, which is to say that they know precisely how much much be withdrawn.

I'm sure the FIs have their computers programmed to accommodate this. If they don't, they would be hearing from CRA. CRA is not going to allow a year to go by without a mandatory withdrawal.