Tag Archives: retirement

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 to Register for a GCKey To Look Up Your CPP Information Online: Part One

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A few months ago I went to the My Service Canada Account website to look up some information on our CPP payments. I unpleasantly found out that they have changed their secure access method and my Personal Access Code was no longer of any use. So today I finally found the time to apply again, this time to register for a GCKey so that I could deal online with the government to check on our Canada Pension Plan contributions.

You can get a GCKey by applying electronically, by telephone, fax, mail or in person.

Getting a GCKey is slow for first time users. You will first have to request a Personal Access Code online. This PAC will be mailed to you. Then you can use it to sign up.

Part 1: How to Apply Online for a Personal Access Code for Your My Service Canada Account

To apply online for a Personal Access Code you will need:

  • your SIN
  • your first and last name as shown on your SIN card
  • your date of birth
  • your mother’s last name when she was born (not after she was married or changed it)
  • your mailing address (from your tax return) will have to be correct before you apply for a PAC
  1. With an internet browser on a secure computer, go to
    http://www.servicecanada.gc.ca/eng/online/pac/pacinfo.shtml
  2. Read the warnings about various current frauds.
    Look for and click on the link sentence:
    Are you a first-time user? Register now!
  3. Click on the link: request a personal access code online
    http://www.servicecanada.gc.ca/eng/online/mysca.shtml
  4. Read the information, then click the link: Continue to Privacy Notice Statement.
  5. Read the info, then click the link: Continue
  6. Fill in the required fields:
    • In the Social Insurance Number field, type your SIN.
    • In the First Name field, type your first name as reported on your SIN card.
    • In the Last Name field, type your last name as reported on your SIN card.
      NOTE: If you changed your last name when you married, but you didn’t change your last name on your SIN card, it will expect you to use your unmarried last name.
    • In the Date of Birth, type the year of your birth, then select the month and day of your birth from the drop-down lists.
    • In the Mother’s Last Name at Her Birth field, type in your mother’s unmarried last name.

    Review the information and if it looks correct, click on the Submit button.

  7. If all goes well, the next screen will request you to enter your Postal Code.
    • In the Postal Code field, type your Postal Code.
    • If you are a foreign resident (for example, if you are not living in Canada right now) select the Country you are living in from the drop-down list.

    Click on the Submit key.

  8. On the next screen, review the mailing address that they have on file for you. If it is correct, click on the Submit button.
    If it is not correct, click on the Cancel button. You will need to update your address with the government before you can order a Personal Access Code. See http://www.servicecanada.gc.ca/eng/sc/oas/pension/answer_cppaddress.shtml
  9. The statement says they will mail the PAC to this address within 5-10 business days.
  10. Click on the big red Log Out button on the right side of the screen!
    To complete the Log Out, click on the Continue button.
    To increase security, close your browser session.

So now we wait…..

(Don’t forget you can telephone and request them to mail you your CPP Statement of Contributions if you don’t want to plod through all of these steps.)

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