What is a self-directed RRSP and what are its advantages?

A self-directed RRSP allows you to make a wider variety of investments. The most common self-directed RRSP investments are shares and debts of public corporations, B.C. and Canada Savings Bonds, mutual funds, and home mortgages.

There is usually an annual administration fee for a self-directed RRSP in the $100 to $150 range. Such fees are not tax deductible. Generally, you should have at least $15,000 in assets in a self-directed RRSP to make it worthwhile paying the average administration fee.

If you're looking for more control and flexibility over your RRSP investments, look into a self-directed RRSP.

The Institute of Chartered Accountants of Alberta provides information for RRSP Tips as a public service.

Can you transfer your RRSP from one financial institution to another?

Yes you can, but be aware that in order to transfer an RRSP account without triggering any taxes, the transfer must be payable to the new institution in trust for you. Your new RRSP issuer arranges the transfer. Between self-directed plans, you can transfer existing investments “in kind.” The trustee of your present RRSP may charge a nominal fee against your RRSP for the administrative work involved in the transfer.

To avoid having the funds stuck in the mail, thereby foregoing earning potential, you may be able to arrange to pick up the cheque from your present institution and deliver it to the new institution. Or you can arrange for a courier.

The Institute of Chartered Accountants of Alberta provides information for RRSP Tips as a public service.

What fees are charged on an RRSP?

You should be aware that there may be fees associated with your RRSP. Fees may be charged to your RRSP when you make a withdrawal, when you close your RRSP, or transfer the funds to a different RRSP issuer. These fees range from as low as $25 to as high as $100.

As well, most RRSP’s have an annual administration fee, and may have transaction fees. These are not tax deductible.

Mutual fund RRSP’s charge management expenses, and you may also pay a front-end or back-end (deferred sales charge) load fee.

Before you decide to invest in any RRSP, find out what the annual costs are, and the fees for winding up the plan.

The Institute of Chartered Accountants of Alberta provides information for RRSP Tips as a public service.

Pension Adjustment Reversals

If you have been a member of a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP), you have had your annual RRSP deduction limit reduced by a figure called the pension adjustment. This figure is reported on your T4 slip for each year you are a member of an RPP or DPSP.

If you exited from an RPP or DPSP in 2003, it may cause a downward change to the pension adjustment figures previously reported to you regarding that plan. The revision is called a Pension Adjustment Reversal (PAR). This will adjust your 2003 RRSP deduction limit upward.

A PAR would be reported to you if your pension benefits were not vested, or if the lump sum you were able to transfer from the RPP or DPSP was less than the pension adjustment figures previously reported to you.

The PAR for those who leave an RPP or DPSP will be reported to them within 60 days of the end of the calendar quarter (or January 31 if the termination occurs in the fourth quarter of the calendar year) in which they cease to be a plan member.

The Institute of Chartered Accountants of Alberta provides information for RRSP Tips as a public service.