Today’s question is from Christine:
How can I move a self-directed RRSP account from my broker to a self-directed RRSP account with TD Waterhouse?
It’s quite simple to transfer a RRSP account between different institutions — look for a transfer authorization form from the institution you want the account transferred to (the TD Waterhouse form for transferring a registered account can be found here). The form is fairly self-explanatory but the key decision you have to make is whether to transfer each security in-cash or in-kind. When an in-cash transfer is made, your investment will be sold and the proceeds transferred to the receiving institution in the form of cash. In-kind means the account is transferred as is, without any changes to the extent possible (it may not be possible to transfer some securities such as TD e-Series funds to another institution). Note that if you request an in-cash transfer of taxable accounts, you may be on hook for capital gains taxes.
As you could probably guess, a transfer out fee is charged by the institution you are transferring out of. TD Waterhouse, for instance, the transfer out fee is $125 plus applicable taxes. If your account is large enough, the receiving institution could agree to refund the fee. So, be sure to call and ask for a refund before you initiate a transfer. If an agent agrees to a refund, write down the name of the agent and don’t forget to follow up and call in the refund request once the transfer is complete.
Also, dividend payments received in the old account after a successful transfer will be moved later automatically.
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15 responses so far ↓
1 Robillard // Aug 12, 2008 at 12:28 pm
Any institution that offers RRSP accounts needs to have some sort of transfer form available to facilitate transfers to other financial institutions. There is a universal transfer form for RRSP accounts available from the the CRA. It is form T2033 and it is available here: http://www.cra-arc.gc.ca/E/pbg/tf/t2033/t2033-07e.pdf
If you are only transferring between brokers, there is generally no need to transfer-in-cash, unless of course your new broker does not permit you to own certain securities in your old account. If you are transferring a “nominee account” (typically one held at a broker) to a “client name” account (typically one held directly with a mutual fund company), and you are transferring securities other than mutual fund units of the receiving institution, then you probably need to transfer-in-cash.
On a related note, transferring-in-kind generally does not set off contingent provisions caused by early sale of securities (like deferred sales charges). Make sure that your vesting period is complete if you want transfer-in-cash mutual funds that have deferred sales charges if you don’t want to get dinged.
2 Peter // Aug 12, 2008 at 12:38 pm
And be aware of the implications of cashing out LSIFs before their eight year [less a month(?)] holding period.
3 Canadian Capitalist // Aug 12, 2008 at 12:38 pm
Robillard: Thanks for your detailed comment. I didn’t know about the CRA transfer form. Learn something new every day! (I’ll update the post with that information).
4 Charles // Aug 12, 2008 at 1:38 pm
And regarding in-cash transfers…
If your old brokerage has more expensive trade commissions, then transferring stocks/ETFs in cash will usually also cost you trade commissions. So those should be transferred in-kind.
5 Phil S // Aug 12, 2008 at 8:03 pm
Hey CC. Interesting timing for tis particular post, as I read this flyer for the “RBC Signature No Limit Banking” account. The flyer reads “unlimited banking transactions”, “use any other ATM 3 times a month with no charge from RBC”, “free personal cheques”, and “no minimum balance required”. And for their promotion, they offer some kind of a pocket PC as well!
If I recall correctly, you were using RBC before? Did you have these accounts? Is this all true? Because if it is, then it’s a much better plan than what I’m currently getting, as I have to pay something like $25 for every 1000 cheques, plus I have to maintain a balance of $1500 in my no-interest chequing account to keep from getting service charged to death, plus I get nailed to the cross every time I use somebody else’s ATM. Although RBC’s high interest savings account isn’t as sweet (2.75%) as ING’s (3%), at least they have one as opposed to my bank who is offering something like 1.75% (why bother?). I don’t like to mention names, but my current bank’s initials are BMO.
The ATM fee issue isn’t a big problem for me under normal circumstances, but it’s really annoying when you’re travelling and don’t know where the nearest bank of yours is, or are out of the country where there is no branch available - then you get dinged for some astronomical ATM fee.
I am thinking of going into the local branch to get some details on Saturday to see if it’s really true or whether there’s all sorts of hidden fees that they didn’t put on their flyer. I don’t expect that I will transfer all my stuff over - but I will likely change my direct deposit from work there and then start to do all my day-to-day banking there, then maybe eventually get everything else going.
6 Chuck // Aug 12, 2008 at 11:25 pm
Hi Phil:
RBC was looking for some more business from me and I spoke with the personal banker about this account.
The deal does have a few stipulations:
- you need a service plan of a min $14/mo
- direct deposit of your paycheque (or purchase a GIC)
- move 2 pre-authorized bill payments over like mortgage or car insurance.
I didn’t go with it, because they weren’t willing to be overly competitive with interest rates on my mortgage renewal
7 Canadian Capitalist // Aug 12, 2008 at 11:43 pm
Phil: While I have accounts with RBC, I am not willing to pay a monthly fee. So, I keep an account (Day-to-day savings account) that offers a few free chequing transactions every month (1 per month + 1 per payroll deposit). I deposit the pay cheque into that account but use a PC Financial account for most of my banking. It is very rare that I get dinged for a $1 transaction fee.
You can find the details of the RBC Signature No Limit Banking here:
http://www.rbcroyalbank.com/RBC:SKJVn471JsYAB-BmOtY/products/deposits/signature-no-limit-banking.html
Not sure whether you were offered a better deal, but it sounds to me that there is a minimum $10 monthly fee. Even if I ordered a cheque book every year, travel a lot, I doubt if I’d spend $120 in banking fees.
8 Phil S // Aug 13, 2008 at 5:47 pm
Ugh! I knew it was too good to be true. I have yet to see any bank offer a no-fee service here, in the same way that they do in the USA. Especially one of the Big 5 banks! Thank you very much, now I at least know not to bother wasting my time.
9 Novice // Aug 15, 2008 at 3:38 pm
hey CC - is changing from a non-self directed account (with oh we’ll say… Mackenzie Financial…) to a self-directed account also a similar procedure? I have a feeling that the fine print may hurt.
10 Canadian Capitalist // Aug 17, 2008 at 9:59 pm
Novice: It should be. Just call Mackenzie and ask for a transfer form. They should have one. I’ve done a similar transfer many years ago from a National Bank mutual fund account to my SDRSP account and remember the process being the same.
11 Sandy Kemsley // Aug 18, 2008 at 12:12 pm
What about transferring from a registered US-based account into my existing RRSP - is that possible? I worked in the US for a couple of years and contributed to an IRA, but don’t plan to move back there and would like to transfer the IRA holdings into my RRSP.
12 Canadian Capitalist // Aug 18, 2008 at 3:48 pm
Sandy: I wouldn’t think it is possible to transfer your IRA into a RRSP but you’ll have to ask a specialist about this.
13 Leslie // Aug 18, 2008 at 5:30 pm
You can transfer an IRA but not a 401K. As CC recommends, see a tax specialist before doing this. Some reading here also http://www.advisor.ca/images/other/ae/ae_1205_moveit.pdf
I understand you will have to pay a tax on ‘withdrawal’ as the IRS does not recognize an RRSP as a qualified account, but under the tax treaty will recover that tax.
Do not do the transfer until you have moved back to Canada. Are you a Canadian or US citizen? This makes a difference as if the latter, the IRS considers you taxable no matter where you live in the world. In that case you may be better to leave the IRA intact as long as the manager of the plan allows non-residents to trade in account.
14 Rusty // Aug 30, 2008 at 4:08 pm
For those of you using TD Mutual Funds e-series and TD Waterhouse: how would I move some RSP e-series funds held within TD Mutual Funds into a Waterhouse RSP ETF?
15 Jug // Oct 20, 2008 at 4:19 pm
Ok, how about this situation. Say I want to move my RRSP mutual funds (scattered accross a number of companies Trimark, Templeton, Fidelity etc…), into some iShares ETF’s that I want to manage through the RBC Direct discount brokerage. The total value is around (100K). The problem is that most of the mutual funds were bought with a back end load that has not “expired” yet. Would it be advisable to move the money out in “chunks” as it becomes freed up, or bite the bullet and just move it all now? Also how hard will this process be? Thanks!
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