Can I Withdraw Cash from my BMO RRIF Even Though My GIC Has Not Matured?

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It can happen suddenly: you are managing on your retirement income from CPP, OAS and your annual minimum RRIF withdrawal. But then a sudden expense comes up: maybe you have a fall, break a hip, and need a wheelchair immediately. Maybe the roof blows off in one of these unusually windy storms. You have lots of money in your RRIF for just such an emergency but it is invested in GICs—can you withdraw some cash even if your RRIF GIC has not matured yet?

What Is a RRIF? What Happened to my RRSP?

Written 2023

During the year you turn 71 you can’t keep a RRSP. You have to change it to one of several things. One of the most common choices is to convert it to a RRIF, a Registered Retirement Income Fund, especially if your RRSP was at a bank or credit union. Other choices include buying an annuity (similar to buying a pension) or taking the value out entirely and paying income tax immediately on the entire amount. You can even do a combination: take out some, buy an annuity with some more, and transfer the remainder into a RRIF.

Do I Have to Withdraw Money/Value from my RRIF?

There are federal government rules controlling RRIFs. The most noticeable rule is that you must withdraw some of the savings in your RRIF each year and report the withdrawn amount as income on your annual income tax return. (You can see an approximate % you have to withdraw on the CRA website. There are some quirks.)

What If I Don’t Want to Spend My RRIF Money?

You don’t have to spend the withdrawn amount (though you must pay any income tax owing). You could, for instance, save the withdrawn amount in a bank account or a TFSA. The government just wants to start getting its “share” of the deferred-tax that has been locked up safely in your RRSP/RRIF.

What If I Need to Withdraw More Money Suddenly from my RRIF But It’s Locked Up in GICs?

Many of my older relatives opened bank RRIFs and transferred in their RRSP accounts. Although they could have bought bank mutual funds in their RRIFs, most of them bought guaranteed investment certificates, GICs.

When I saw the GICs, I wondered what would happen if they needed more cash suddenly. I knew they can legally always withdraw more money from their RRIFs. They just must report it on their income tax return and probably have to pay income tax on it. But were these GICs cashable before maturity?

Yes, they are!

We had to help them make an extra withdrawal from a RRIF at BMO and a RRIF at RBC. In both cases, they were able to withdraw the cash immediately even though the money was invested in GICs at the time. The bank representatives said that by law, the RRIF owner must be allowed to make withdrawals at any time.

Of course I strongly recommend you ask the financial institution that administers your RRIF what the rules are for your GICs. Rules can change.

Can I Cash Out My RRIF GIC Early and Re-Invest It in Another RRIF GIC at a Higher Rate?

In most cases, no. Rarely, someone might invest in a fully redeemable/cashable GIC in their RRIF. In that case, they could cash it out and re-invest it. But almost no one buys that kind of GIC in their RRIF.

Be careful you are not tricked by the name the bank uses for your regular RRIF GIC. Because you are allowed to redeem or cash the GIC so that you can make a withdrawal from your RRIF suddenly, the name may say cashable or redeemable. But those kind of GICs can ONLY be cashed early if you take the money out of your RRIF and report it on your income tax return.

Yes You Can Make an Emergency Withdrawal from your RRIF Even If Your Money Is In GICs

As mentioned earlier, I suggest you call the holders of your RRIF and confirm you can make an emergency withdrawal from your RRIF—just in case the rules change.
In the meantime, I’m glad my relatives were able to buy that wheelchair without worry.

Related Reading

  • Transferring a RRSP from BMO InvestorLine to CIBC Investor’s Edge

How to Transfer Money from Your BMO Bank Account Into Your InvestorLine Non-Registered Investment Account

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I recently helped coach some relatives on how to open a non-registered investment account at BMO InvestorLine. Once the account was activated, I needed to show them how to move some of their cash from their savings account into their chequing account and then into their InvestorLine account.

Moving Cash from Your BMO Chequing Account Into Your BMO InvestorLine Account

  1. Sign in to your InvestorLine account.
  2. Under the Account Services heading, click on Move Money.
  3. In the From box, click on Choose Account.
  4. From the list, select the account from which you wish the money to be taken.
  5. In the To box, click on Choose Account.
  6. From the list, select the InvestorLine account into which you want the money deposited.
  7. On the line starting with the $ under the heading How much do you want to transfer? Type the amount of funds, in Canadian Dollars, that you wish to move.
  8. Check whether the desired frequency of withdrawal is selected under the Choose a frequency heading.
    In my case, I made sure that Once was selected.
  9. If necessary, change the date for the withdrawal by selecting the Calendar icon under the Date heading.
  10. When everything looks good, click on the Continue button.
  11. Review the summary.
    If it’s ok, click on the Submit button.
  12. Make a note of your confirmation number in case you need to verify the transaction later.

You’re done! Get ready to buy some investments in your InvestorLine account!

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