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Email this3:51 pm
December 20, 2024
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My husband has rrif's over at a couple of banks. Can I withdraw the whole amount from one bank and have it count as the 5.28% as a whole. Another way to say it is if I had 94,000.00 in one bank and had 6000.00 in another. Could I cash in the 6000.00 (which is more than the 5.28%) and put that on my taxes and leave the 94000.00 alone in the other bank.
That way I don't have to move my rrif I would just cash it in.
Thanks
11:35 pm
October 21, 2013
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The simple and true answer is "no".
You really have no control over this. Each FI willl take the same percent out of the RIF funds you hold there.
And the story gets worse...
If you hold more than one deposit at a given FI (e.g. 2 or more RIF GICs), the FI decides which one to take the money from, not you; and they all have their own rules about this.
And, if you choose to transfer RIF funds to another FI, the mandatory withdrawal for that year will be removed before it is transferred - even if it's January; it's the law.
Some of the many reasons why I dislike the RSP/RIF system.
12:49 am
April 6, 2013
Online
Definition of a RIF in Income Tax Act 146.3 (1) requires the minimum be taken from each RIF arrangement separately each year:
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)
10:25 am
April 6, 2013
Online
The only way to do what is described is to have one RIF that holds both the $94,000.00 in one bank and $6,000.00 in the second bank.
Investment dealers, like Scotia iTRADE, offer RIF's can hold $94,000 of GIC's from one bank and $6,000 of GIC's from another bank. The minimum withdrawals can then be from any combination of the $100,000 of GIC's that mature in the year.
Specialty trust companies can also offer RIF's that do that and that, as well, can hold more esoteric assets like private company shares and non arms-length mortgages. It used to be the in-thing to have one's RRSP or RRIF hold one's own mortgage!
2:10 pm
October 21, 2013
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Norman1 said
The only way to do what is described is to have one RIF that holds both the $94,000.00 in one bank and $6,000.00 in the second bank.Investment dealers, like Scotia iTRADE, offer RIF's can hold $94,000 of GIC's from one bank and $6,000 of GIC's from another bank. The minimum withdrawals can then be from any combination of the $100,000 of GIC's that mature in the year.
Specialty trust companies can also offer RIF's that do that and that, as well, can hold more esoteric assets like private company shares and non arms-length mortgages. It used to be the in-thing to have one's RRSP or RRIF hold one's own mortgage!
From what Norman has written, it would appear that , in a brokerage RIF, you have to take the mandatory amount from a maturing GIC. This will restrict your choices. You might prefer to reinvest the money and withdraw instead from one that is ongoing but only pays 2%. Or you may only have one GIC maturing annually So I don't think this really solves your problem.
Personally, I don't think specialty trusts with esoteric options are a good idea for any registered plan. In the case of RIFs, the mandatory withdrawal is based on balance at previous year end. If your investment goes down this year, you still have to pay out the same amount, reducing your capital more signiicantly and making it harder to keep steady income and balance.
But , yes, these may be the only workarounds, just inadequate.
10:06 pm
December 20, 2024
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Thank You Everyone. It's too bad. I thought it made cents (pun lol) to do it that way but I couldn't find information on it. From what I understood from my bank when I asked if they had to cash in the GIC. I was told no, that they leave the GIC at the same rate and just take out what the government makes them pay. Unless I understood that wrong. I think I had better check 🙂 wouldn't be the first time I got it wrong. Thanks again I do appreciate it. I wish every one a Very Merry Christmas and a Happier New Year!!
11:00 pm
April 6, 2013
Online
Irebel said
…From what I understood from my bank when I asked if they had to cash in the GIC. I was told no, that they leave the GIC at the same rate and just take out what the government makes them pay. Unless I understood that wrong. I think I had better check 🙂 …
You understood that correctly.
GIC's in a RRIF don't always have the same terms and conditions as a regular, non-registered GIC. When the RRIF is with the same bank/trust company/lender who issues the GIC for the RRIF, it is common for the GIC to have fine print that allows it to be partially or fully cashed before maturity for RRIF withdrawals.
That's not the case with the GIC's offered for a RRIF with investment brokers, like Scotia iTRADE. Those GIC's are identical to the GIC's for non-registered accounts.
7:16 am
April 6, 2013
Online
Earlier thread RRIF rules at Oaken discusses how different financial institutions handle the RRIF minimum withdrawal with unmatured RRIF GIC's.
12:35 pm
October 21, 2013
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Yes, the banks will just take money out of the GIC to do the mandatory payout. However, in a previous thread, I got the impression that this was not so easy in a brokerage account. It seems that in a brokerage account, the annuitant must somehow arrange to have the cash available for that withdrawal, not the individual banks that issue the GICs.
1:59 pm
October 27, 2013
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Loonie said
Yes, the banks will just take money out of the GIC to do the mandatory payout. However, in a previous thread, I got the impression that this was not so easy in a brokerage account. It seems that in a brokerage account, the annuitant must somehow arrange to have the cash available for that withdrawal, not the individual banks that issue the GICs.
That is because GICs in a brokerage are not issued by the brokerage. They are issued by third parties, e.g. any one of 20 banks or so, and reside at the brokerage in nominee name. There is no mechanism to reach out to the actual issuer to 'break' that GIC.
Where the brokerage shines is one can have any thousands of combinations of assets* within the RRIF allowing the account holder to manage what s/he wants to sell to raise the cash for the annual withdrawal. It really is not difficult to manage a RRIF to provide the range of assets and maturities necessary to fund withdrawals.
* could be entirely GICs of various maturities, issuers and amounts, OR a combination of equities and GICs, OR a combination of ISAs, GICs and equities, etc.
Example 1: My elderly mother had 85% in a five year GIC ladder of multiple GICs, and the rest split between an ISA (HISA) and an equity mutual fund. There were thus 3 separate sources of cash for any given year depending on which made the most sense to monetize.
Example 2: I have a single asset allocation ETF, namely VCNS (40/60 equity/bond) that I sell units thereof to fund my annual withdrawal every Dec 15th. Some years it may be down from its peak price but it almost always is well above its rolling 5 year CAGR.
4:33 pm
April 6, 2013
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Loonie said
… It seems that in a brokerage account, the annuitant must somehow arrange to have the cash available for that withdrawal, not the individual banks that issue the GICs.
One needs to have cash available for the remnant. But, the most of the withdrawal from a brokerage RRIF can be in-kind.
If the required minimum withdrawal were $5,200, one could withdraw 94 shares that are worth $55 each plus $30 in cash from the RRIF brokerage account to one's non-registered account. No need to sell anything except maybe one of the $55 shares to have at least $30 available for the remnant.
4:45 pm
October 27, 2013
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That works if one has equities (in kind transfer out) in the RRIF but doesn't work for a bond or GIC (partial withdrawal that is). One would need to withdraw the entire bond or GIC. That said, there is quite a range of flexibility to meet withdrawal requirements....making it for practical purposes either a non-issue, or a minor issue.
7:42 am
April 6, 2013
Online
Not an issue with marketable bonds. They are usually issued in denomination of $1,000 face value.
Yes, GIC's would need some planning. One would have to think ahead and purchase multiple smaller GIC's with the same maturity instead of a single GIC.
3:38 pm
October 21, 2013
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In my view, the recent posts demonstrate, again, how complicated it is to use a brokerage RIF. And, the older you get, the more complicated it will appear. I see no advantage at all for someone who doesn't want to go beyond GICs, and it was previously demonstrated that you get better GIC deals elsewhere usually..
Each to their own.
For GICs, the best deal may be a CU, with unlimited deposit insurance and the ability to withdraw discretionary amounts from RIF GICs as you wish.. And you don't have to do any planning about he mandatory withdrawals; they look after it.
OP was only asking about GICs.
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