Converting RRSP to RRIF? | RRSPs and RRIFs | Discussion forum

Motive Financial does offer RRIF's, according to earlier discussion Transferring RIF's to Motive.

If Motive no longer offers RRIF's, then one will need to discuss the situation, the RRSP maturing before the RRSP GIC matures, with them. That could involve redeeming the RRSP GIC early with possible penalties for transfer to a RRIF or annuity elsewhere. Otherwise, the RRSP could deregister at the end of the year one turns 71 with tax consequences.

There are only three possibilities for the assets in an RRSP by the end of the year the annuitant turns 71. One needs to pick at least one of the three: (1) the assets must be withdrawn, (2) the assets are transferred to a RRIF, or (3) the assets are used to purchase an annuity.

The fine print of the Motive RRSP suggests that Motive does have RRIF's:

13. Designation of Maturity Date: You may designate in writing a date (the “Maturity Date”) on which to begin receiving retirement income. The Maturity Date will not be later than December 31st of the year in which you attain 71 years of age or any other age permitted by the Applicable Tax Legislation.

14. Maturity of the Plan: The plan will mature on the Maturity Date. No later than ninety (90) days before the Maturity Date you must provide us with written instructions to transfer the Plan Assets to a RRIF or to liquidate the Plan Assets and use the proceeds to acquire a life annuity in accordance with Applicable Tax Legislation. If we have not received your written instructions prior to the Maturity Date, you will be deemed to have instructed us to transfer the Plan Assets to a Retirement Income Fund (“RIF”) in your name. Furthermore, you will have deemed us to act as your attorney to execute documents and make elections necessary to establish the RIF and to register such RIF under Applicable Tax Legislation.

I just went through this conversion this month... the RRSP holding institution (A) that doesn't offer RRIFs allowed me to transfer my RRSP in full, including accrued interest, to another institution (B) that does offer RRIFs. (B) then promptly moved it into a newly-created RRIF GIC. Every year, they will pull the minimum withdrawal out despite it being in an RRIF GIC.

(I'd taken the precaution of having the RRSP in an institution (A) that has no registered transfer-out fees. When I started it, typical transfer-out fees were $25-$50; now they are often $150 or more, even more if at a brokerage!)

An interesting note that both institutions confirmed but I haven't had the patience to ask CRA about - it seems the RRSP has to be converted to an RRIF before the end of the year in which one turns 71, but the first withdrawal doesn't have to be made until the NEXT year.

Canada Life agrees - I found this at:

/www.canadalife.com/investing-saving/retirement/registered-retirement-income-funds-rrif/rrif-withdrawal-rules.html

which says

Withdrawals start the next calendar year after you convert to a RRIF. If you converted in 2022, then you must begin withdrawing funds in 2023.

If anyone has solid info that that's not the case, please point me to a reference. I'd hate to give anyone wrong guidance.

dommm said
Thanks for your reply Norman1. From the link you provided it seems I'm not the first to search the Motive website for any RIF info without success. I have sent an email off to Motive explaining my situation & asking for guidance.

Yes, for some reason, their site has no info about their RRIF's!

Some GIC's in a RRIF are special RRIF GIC's that can be cashed partially before maturity for RRIF withdrawals. I've read about some that will allow the accrued interest to be withdrawn before the usually compounding date!

The rates aren't usually as good for such RRIF GIC's. One can see that in the best GIC rates from a deposit broker.

Alexandra said

All of my RRIF's are in GIC's. Each F.I. is slightly different but for the most part,
say with Oaken, Minimum RRIF payments are taken out of the GIC having the lowest interest rate, if you have say 2GIC's with same rate they pay out from the GIC with the shortest term. If 2 or more GIC's have same rate and same term then they pay out from the GIC with the lowest amount of funds. The calculations show up in the monthly/yearly statements depending on the bank.  

Buy shortest term I mean the GIC that is currently maturing at the earliest date, and not if one gic is 5 yr term compared to 2 yr term.

Norman1: Thanks - your note makes it all clear...

That's effectively the case as the minimum withdrawal for the first year is $0.

CAD: As far as I can tell, all financial institutions offering RRIF GICs are required to allow withdrawals from them. But perhaps a truly locked in one might be offered for those who already have some others to make withdrawals from? Before I researched this I had expected to find that one would have to keep enough in a savings account RRIF to make the minimums until the GIC portion matured.

And thanks to all the others who confirmed. I didn't run into any outfits that said their rates would be lower if withdrawals were allowed on GICs. I did get a relatively low rate because my RRIF was too small (<$5K) for most better ones to be available to me.