Personal Finance

Moving RSPs out of Tangerine

  • Last Updated:
  • Feb 27th, 2018 7:37 pm
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Jan 9, 2011
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Vancouver

Moving RSPs out of Tangerine

I want to jump on Coast Capital credit union's 4% guaranteed 33-month term deposit. This promo ends March 20th 2018. Spouse has two RSP GICs in Tangerine that are maturing on March 31 ($7k) and June 14 ($36k).

Two questions:

1) Please correct me if I'm wrong, but it looks like there is no more early redemption of GICs at Tangerine. If that's true, where can we borrow $43k to deposit at Coast Capital now, and pay back in a few months when we cash out Tangerine?
2) What are the tax implications of cashing out RSPs from Tangerine and opening TFSA at Coast Capital? I'm guessing this will be a huge tax bill. If we get RSP at Coast Capital, then no tax bill...right?

Sorry if these are dumb questions, I'm new to this.
7 replies
Sr. Member
Mar 4, 2010
572 posts
285 upvotes
Toronto
1) correct, there is no early redemption fee on the GIC's online. maybe call them if it still is an option over the phone?
2) anytime you take out RRSP's from the tax shelter, it's treated as if it was part of your regular income. So if you make 50k, and you take out 50k from rrsp, you will have to remit taxes when you do your income taxes based on income of 100k. They withhold a % based on how much you withdraw, so thats counted towards your taxes payable at the end of the year.
If you are putting it to a TFSA, you will be taxes fully. If you are taking a loan out for 50k, putting that to RRSP then withdrawing the RRSP from tangerine later, i'm not so sure but it washes out, but you lose the contribution room permanently.

RRSP are just a route to defer taxes, not avoid them. The intention is when you are retired you should have no ordinary income and your expenses are minimal (as your house, car, large debts should be mostly paid off) meaning you can pay less taxes then on the income you get from RRSPs

I've done a couple rrsp withdraw's in my life for emergency rainy day funds when i've been unemployed for long periods. It's not the best to do in your situation though as you have no real need to withdraw it.
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Jan 9, 2011
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Yikes. So if we cash out $43k in RSPs from one financial institution and put them into RSPs at another, the taxes are a wash, but we permanently lose $43k in contribution room?
Sr. Member
Jul 15, 2003
910 posts
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GTA, Ontario
Kiraly wrote: Yikes. So if we cash out $43k in RSPs from one financial institution and put them into RSPs at another, the taxes are a wash, but we permanently lose $43k in contribution room?
What you are looking to do is 'transfer' your RRSPs from one institution to another. There is normally a fee attached, in Tangerine's case, it is $45 per transfer. Through this method, you merely transfer from one institution to another and you won't incur the additional taxes/loss of contribution room.

https://www.tangerine.ca/en/faq/saving/ ... ex.html#q7
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Jan 9, 2011
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Dymis wrote: What you are looking to do is 'transfer' your RRSPs from one institution to another. There is normally a fee attached, in Tangerine's case, it is $45 per transfer. Through this method, you merely transfer from one institution to another and you won't incur the additional taxes/loss of contribution room.

https://www.tangerine.ca/en/faq/saving/ ... ex.html#q7
Thanks for that info.

The whole reason I want to transfer from Tangerine to Coast Capital is because Coast Capital is offering 4% 33-month GIC. That beats what Tangerine is currently offering by a long shot. Problem is, this promo rate expires before I can get the money out of Tangerine. Maybe I should give up on Coast Capital? Losing $43k in contribution room by borrowing the money for a few months doesn't seem worth it—is there any other way?
Sr. Member
Dec 29, 2014
629 posts
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Canada
Coast Capital isn't a CDIC member. Are deposits insured by anyone else?
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Sep 8, 2007
10978 posts
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Way Out of GTA
Tangerine is dead for long term gics. All they offer is gimmicky 2-3 teaser rates now. Plus their high interest savings rates blow also.

Welcome to Scotia!

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