Wants to transfer RRSP

Q – For the last few years I have been unhappy with the financial institution where a lot of my money resides. I have two RRSPs maturing soon and was thinking of transferring these to another financial institution. However, I picked up your book and read that my bank would have the right to hold my request for transferring just to get back at me. Also, they would have the right to freeze my other accounts with them.
 
I also, don’t wish them to know what financial institution I am transferring funds to. Why can’t I cash in the RRSPs when they become due, add them to my income (presently not working) and reinvest this money in an RRSP with the new financial institution?

Thanks for writing “2002 Buyer’s Guide to RRSPs”. I’m also having my mother read your book, because she is turning 69 this year and can use your information on RRIFs and other things in your book. –  Catherine
 
A – Let’s deal with your questions in order.

1) No bank would delay an RRSP transfer “just to get back at you”. However, the financial institutions are swamped with paperwork at RRSP time and delays can occur as a sult. Banks are required to make best efforts to expedite transfers but it can sometimes take a couple of weeks (or more) nonetheless.

2) No bank would freeze any other accounts with them if you requested an RRSP transfer.

3) Your bank doesn’t care which other financial institution you transfer your accounts to. This sort of thing happens frequently.

4) If the amount you have in your RRSPs is small, you could indeed close the account and take the cash. Just be careful, however, because it will be taxable income and if the total exceeds $7,412 you would be subject to tax on it even if you have no other income.

5) Closing one account and opening another entails a lot of paperwork. Frankly, you would be better just arranging for a transfer. But before you do, talk to the local branch manager. Tell him/her that you’re considering a transfer to get a better rate. Ask if they’re prepared to match the competition. If so, you’ve saved yourself a lot of trouble.

6) Finally, consider whether you really want to keep your money in one-year GICs at such a low return. There are many ways of improving your RRSP yield. Look at some of the mutual fund suggestions in the book for examples. – G.P.