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Institutions holding registered accounts such as RRSPs typically charge investors a fee each time they withdraw money. Find out how to minimize costs.
A deregistration fee is charged by a financial institution whenever funds are moved from certain registered accounts such as registered retirement savings plans (RRSPs) to non-registered accounts such as chequing or savings accounts. A partial deregistration fee is charged on partial withdrawals, while a full deregistration fee is charged if you remove all of the assets from your registered account.
Deregistration fees are administrative charges paid to your financial institution. They are not a withholding tax. Withholding tax, as the name suggests, is tax withheld by the financial institution, payable to the Canada Revenue Agency (CRA).
Deregistration fees do not apply if the money is transferred to another registered account. For instance, RRSP funds are frequently used to purchase registered retirement income funds (RRIFs) or annuities. Deregistration fees also do not apply to tax-free savings accounts (TFSAs).
Transferring your RRSP assets to a RRIF by the end of the year you turn 71 (or sooner) is one way to avoid paying a deregistration fee every time you want to access your retirement savings. While other fees may apply to your RRIF, depending on your financial institution, scheduled payments from a RRIF typically do not attract deregistration fees. Some financial institutions offer a few additional withdrawals for free, with a charge if you request more.
Fees for partial or full deregistration vary, usually around $50 for partial and $100 for full. For instance, TD currently charges $25 for a partial RRSP withdrawal and $100 for a full withdrawal, while Qtrade charges $50 for partial withdrawals, $125 for full deregistration.
Example: “Joel accidentally overcontributed to his RRSP. When he removed the extra money, he was charged a partial deregistration fee by his financial institution.”
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