Tag Archives: equities

Can I Take Stocks Out of my BMO InvestorLine RRIF Without Selling Them?

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At this stage, we’re still adding to our RRSPs each year. But all too soon it will be time to change our RRSPs into RRIFs. And once you have a RRIF whether you want to or not, you have to take some assets out each year and pay tax on them. The federal government sets a minimum withdrawal schedule generally starting at age 72. But what if I don’t want to make my withdrawals in cash? I wanted to know if I could take stocks out of my BMO InvestorLine account without selling them.

Why Would I Want to Transfer Out Stocks from my RRIF?

There isn’t a lot of benefit to making a withdrawal “in kind” from a RRIF. Basically, it saves two trading commissions: one for the sale of the stocks inside the RRIF, and one for re-purchasing the stocks in a non-registered brokerage account outside of the RRIF.
There is one other advantage: it reduces the risk that you might sell for a lower price than you have to pay to re-purchase the same shares.

Because you will pay tax based on the deemed value of the shares on the day you transfer them out (not based on the book value, or the price you paid for the shares when you first invested in them) you will not avoid any tax on the capital gain.

In fact any increase in value is not even considered a capital gain. The entire withdrawal is treated as “income” by the government and unfortunately you pay regular tax on it, not just capital gains tax. You can’t claim any capital losses in a RRIF or when making a sale to make a cash withdrawal from a RRIF either. Sorry.

Why Most People Don’t Transfer Stocks out of Their RRIFs

Most people don’t care if you can transfer stocks out or not. They need cash!

If you need the cash right away, there is no need to transfer the stocks out. It’s only worth transferring the stocks out if you have plenty of cash and you want to keep holding that stock for the long term.

For example, you might need the cash value of those stocks to either
(a) live on or
(b) pay the deferred taxes with.

Remember, when you make a withdrawal from your RRIF you have to pay income taxes on it. Generally, you will have to pay when you file your quarterly or annual tax return.

If you withdraw more than the required annual minimum, you will have to pay a portion of the taxes immediately though as tax is “withheld” and submitted to the CRA by your financial institution.

Checking Whether “In Kind” Transfers Out are Permitted to Meet RRIF Withdrawal Requirements

I used the BMO InvestorLine MyLink secure email system to ask whether it is possible to make a required RRIF annual withdrawal “in kind” rather than in cash.

Specifically, I asked whether stocks could be transferred in kind from a RRIF to a regular non-registered InvestorLine brokerage account in order to meet the mandatory government withdrawal schedule.

Stock Transfers Out of a RRIF Are Permitted at InvestorLine

Good news!

Yes, you can transfer shares directly out from an InvestorLine RRIF into a non-registered InvestorLine brokerage account.

The detailed reply included the following information:
“With InvestorLine, the default option is cash payments. If you would like to setup an in-kind payment, they are done on a manual basis. What you would be required to do is contract us, 2 weeks in advance from the scheduled cash payment, and request an in-kind payment. The agent assisting you will submit the request for in-kind shares to be moved to your non-registered cash account and ensure to cancel the cash payment.

Ensure [that a non-registered cash account] is opened prior to the payment being requested to ensure smooth processing of the minimum in-kind RIF payment.”

So it can be done, but you have to be prepared:

  1. Set up your InvestorLine non-registered account well in advance of your first RRIF withdrawal. (I’d suggest opening it at least 2 months in advance.)
  2. Two weeks (or earlier if they will let you) ahead of transfer time, contact InvestorLine and request the schedule cash payment be cancelled.
    At that time request the in-kind transfer. You will have to specify

    • which shares to move,
    • how many shares to move,
    • and how you will pay the withholding tax required by the government if you are withdrawing more than the required minimum (which is likely as the shares are not likely to divide evenly into your minimum requirement).

Let’s  hope we can all transfer the shares in kind –and hope it’s because we’re all rolling in so much cash we don’t need the money!

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Have you done an in-kind transfer of shares from your RRIF to a brokerage account? Did it go smoothly? Please share your tips or tricks with others facing this same challenge by leaving a comment.

How Do I Check My Capital Gain on Shares in my CIBC Investor’s Edge Account?

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When I sign in to my BMO InvestorLine account and look at My Portfolio Holdings, I see at a glance how each of my stocks is doing today against the price I paid for them. For example, I am reminded daily that BNS is significantly underwater if I don’t consider the dividends I have earned. When I look at the Account Holdings summary for our Investor’s Edge account, however, I noticed our CGX was down a few dollars. That didn’t seem likely to me, so I looked more closely. What I was looking at was the daily change in value from the last trading day to today. Where could I check the actual capital gain (or loss!) for shares purchased in our CIBC Investor’s Edge account?

Investor’s Edge Doesn’t Make It Easy to Find the Book Value for Shares

As I mentioned before, when I sign in to my BMO InvestorLine account, every day I have to see how much money I’ve lost on an oil stock I bought in a weak moment. It’s a grim reminder for me to be more careful before buying. Right on the My Portfolio Holdings screen is the Unrealized gain/loss for each investment both in real dollars and as a percentage.

Investor’s Edge, however, prefers to display the $ Change and % Change for the stock as compared to the previous day’s close on the first Account Holdings page that opens. It does have a tab called Last Business Day selected at the top of the display.

I suppose if you are in the habit of flipping stocks often, this might be useful. Personally, I don’t focus that much on the short-term changes in a stock’s value.

Since I wanted to gloat about how much our Cineplex stock had increased in value since we purchased it, I decided to check which view displays the Unrealized Gain. I was rather surprised to find that none of them do, at least not instantly. Here’s what I had to do to find the information.

How to Lookup Your Unrealized Capital Gain on Shares in Investor’s Edge

  1. Sign in to your Investor’s Edge Account.
  2. From the list on the left side of the screen, select Account Holdings.
  3. From the tabs across the top of the display, click on Portfolio/Book Value.
    An error message will display that states:
    “Book value totals are only available at the sub-account level. Please select a sub-account to view book value totals.”
  4. Even if you only have one type of account with Investor’s Edge, you must select that account from the Sub-Account(s): drop-down list near the top of the screen.
    This is not intuitive to me as all over the screen it is reporting that I am looking at the information for our RRSP account. However, lo and behold, the default Sub-account(s): choice is “Combined Holdings.” So I selected our one account as required.
  5. Click on the Get Holdings button.
  6. Check the Gain/Loss and Gain/Loss % information displayed in the column on the far right of the screen.
  7. Click on the Sign Off button. For increased security, close your browser session.

Yay! We have made a tidy little gain on our Cineplex stock. About 10% in the 2.5 months we’ve owned it. That’s what a summer of popular 3D movies will do for you. (That said, I fully expect it to plummet if the new Batman really is Ben Affleck. I guess I should sell now, right?!)

Conclusion: BMO InvestorLine Makes Checking Unrealized Gains and Losses Easier than Investor’s Edge

Overall, I think I like InvestorLine’s account summary screen better than Investor’s Edge’s. I need to have my losses flaunted in their horrible red ink in my face every single day I sign in to our accounts. It’s a great way to remind myself that I am not an investing genius and that I could lose our life savings if I start thinking that I am.

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Does your brokerage screen flash your losses (and your gains!) at you as soon as you sign in? Do you think Ben Affleck will make a good Batman or should I sell CGX? Please share your views with a comment.