RRIF now or later?

Q – I have a number of small RRSPs maturing in 2002.  I am 68 now and need to convert next year.  I have no interest in annuities. Should I stay with the RRSPs or go to RRIFS now ? – R.W.


A – When you say you have a number of RRSPs “maturing” I assume you mean that you have several GICs held within RRSPs that mature this year. RRSPs themselves are just an investment shell and never “mature”.


You have two decisions, therefore: whether to roll over the GICs or reinvest the money elsewhere, and whether to move to a RRIF now.


For starters, I would not go to a RRIF right away unless you need income and are planning to make RRSP withdrawals anyway. When you switch to a RRIF, you have to start taking payments in the year following the conversion. Those payments are taxable. So if you don’t require them, delay for as long as possible.


Second, if you have several RRSPs, I suggest you consolidate them into one or two plans. This can be done as the GICs mature. Just instruct the financial institutions not to roll over the GICs but to transfer the cash into your central RRSP as they mature. en close out the empty RRSPs. The reason for this is that it will greatly simplify the whole process when you do have to convert to a RRIF next year, when you reach 69. Multiple RRIFs are not a good idea, as withdrawals have to be made from each plan to satisfy the tax people. This can get messy if there are a lot of plans.


Once the money is in the centralized RRSP, it can be reinvested in any way you wish. Discuss the options with a financial advisor. – G.P.