Personal Finance

RRSP conversion to RRIF logistics HSBC/BMO?

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  • Jan 8th, 2020 1:21 pm
[OP]
Deal Addict
Jan 30, 2013
1186 posts
333 upvotes
RICHMOND HILL

RRSP conversion to RRIF logistics HSBC/BMO?

Hi I wonder if anybody has done this and would like to advise on the steps involved.

1.Go to bank and sign some forms and hopefully everything is done right?
2.How does the bank make sure you withdraw the minimum starting from the following year after you transferred to a RRIF?
do they remind you ?
What happens if you sell off some stocks,etfs etc which met the minimum withdrawal requirement already?

Would appreciate any advice and which banks RRIF are easier to deal with.Thanks
5 replies
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Feb 1, 2012
1942 posts
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Thunder Bay, ON
My experience is with TDDI, but the experience should be similar with most banks.

1) Yes, ask your bank to open a RRIF for you. The bank will open a RRIF and transfer all your existing investments to it from your RRSP. Or if you are under 71 you have a choice of keeping the RRSP, and only transferring some of your investments to the RRIF.

2) The min RRIF withdrawal is based on your age, and is calculated on your balance at Dec 31. I.e. your min withdrawal for 2020 is based on your balance as of Dec 31, 2019. TDDI monthly statements indicate the minimum withdrawal for the year. Late in the year they will send a reminder letter. If you ignore that, the financial institution will do a RRIF withdrawal for you, based on some logic of which securities they should sell for you.

3) If you do your own RRIF minimum withdrawal before yearend the bank will recognize that and not do a RRIF withdrawal for you.
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Deal Fanatic
Jan 21, 2018
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Vancouver
goldenball wrote: What happens if you sell off some stocks,etfs etc which met the minimum withdrawal requirement already?
As with RRSP, it makes no difference what form the investment is in, e.g. cash or stocks. The important thing is whether it is inside or outside the tax-free RRIF. So if you sell a stock or fund, you must then transfer the proceeds outside the RRIF to count toward the minimum withdrawal. And whatever you transfer out counts as taxable income for that year.
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Aug 5, 2006
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Global Village
As others have said there is a minimum withdrawal based on your age calculated as 1/(90 – age), for ex if you are 65 1/(90 – 65) = 4.00% of your total RRIF amount with that bank. You may want to have your RRIF $ in more than 1 bank for additional withdrawal purposes.
It may also be a good idea to tell your bank/s to make the minimum RRIF withdrawals on Jan 1 every year so if you have to make additional withdrawals later in the year you'll have a more exact understanding of the total yearly withdrawals.

Keep in mind the below for every additional withdrawal:

ON Withholding tax rates
Amount in excess of the minimum amount
Up to $5,000 10%
Between $5,000 and $15,000 20%
More than $15,000 30%

If you are age 65-71 you can take advantage of the pension income tax credit where you can withdraw $2,000 each year tax-free.

As far as banks easier for RRIF withdrawals Tangerine is 1 of them in that they let you make RRIF withdrawals online while others may not.
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[OP]
Deal Addict
Jan 30, 2013
1186 posts
333 upvotes
RICHMOND HILL
Deepwater wrote: My experience is with TDDI, but the experience should be similar with most banks.

1) Yes, ask your bank to open a RRIF for you. The bank will open a RRIF and transfer all your existing investments to it from your RRSP. Or if you are under 71 you have a choice of keeping the RRSP, and only transferring some of your investments to the RRIF.

2) The min RRIF withdrawal is based on your age, and is calculated on your balance at Dec 31. I.e. your min withdrawal for 2020 is based on your balance as of Dec 31, 2019. TDDI monthly statements indicate the minimum withdrawal for the year. Late in the year they will send a reminder letter. If you ignore that, the financial institution will do a RRIF withdrawal for you, based on some logic of which securities they should sell for you.

3) If you do your own RRIF minimum withdrawal before yearend the bank will recognize that and not do a RRIF withdrawal for you.
scoper wrote: As others have said there is a minimum withdrawal based on your age calculated as 1/(90 – age), for ex if you are 65 1/(90 – 65) = 4.00% of your total RRIF amount with that bank. You may want to have your RRIF $ in more than 1 bank for additional withdrawal purposes.
It may also be a good idea to tell your bank/s to make the minimum RRIF withdrawals on Jan 1 every year so if you have to make additional withdrawals later in the year you'll have a more exact understanding of the total yearly withdrawals.

Keep in mind the below for every additional withdrawal:

ON Withholding tax rates
Amount in excess of the minimum amount
Up to $5,000 10%
Between $5,000 and $15,000 20%
More than $15,000 30%

If you are age 65-71 you can take advantage of the pension income tax credit where you can withdraw $2,000 each year tax-free.

As far as banks easier for RRIF withdrawals Tangerine is 1 of them in that they let you make RRIF withdrawals online while others may not.
Does the person helping you with the RRSP to rrif transfer form understand the difference btw beneficiary and successor annuitant?Or the form provides a box to make the selection easier? I am asking because one of the bank's misspelled my beneficiary s name and did not explain what s the difference between B n SA when I set up my RRSP tfsa .I corrected the bank's misspelling n change to SA designation years later only after I read an article on retirehappy.ca
[OP]
Deal Addict
Jan 30, 2013
1186 posts
333 upvotes
RICHMOND HILL
scoper wrote: As others have said there is a minimum withdrawal based on your age calculated as 1/(90 – age), for ex if you are 65 1/(90 – 65) = 4.00% of your total RRIF amount with that bank. You may want to have your RRIF $ in more than 1 bank for additional withdrawal purposes.
It may also be a good idea to tell your bank/s to make the minimum RRIF withdrawals on Jan 1 every year so if you have to make additional withdrawals later in the year you'll have a more exact understanding of the total yearly withdrawals.

Keep in mind the below for every additional withdrawal:

ON Withholding tax rates
Amount in excess of the minimum amount
Up to $5,000 10%
Between $5,000 and $15,000 20%
More than $15,000 30%

If you are age 65-71 you can take advantage of the pension income tax credit where you can withdraw $2,000 each year tax-free.

As far as banks easier for RRIF withdrawals Tangerine is 1 of them in that they let you make RRIF withdrawals online while others may not.
I just find out that for HSBC you must fix a pre-arranged date for withdrawal or change that date by email.Telephone instruction will not suffice either.You can't DIY online ( as Tangerine). Any other banks other than Tangerine which let you make the withdrawal online by yourself at your convenience? Thinking of changing bank and transferring

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