By: Larry MacDonald
Beware RRSP investors. You could get hit with unexpected charges on your RRSP if your holdings have declined below the minimum balance required by your financial institution. Let’s illustrate with an example.
Say you had $27,000 in a self-directed RRSP at CIBC Investor’s Edge last August and it has now dropped in value to $23,000. That means this August 15, when CIBC Investor’s Edge levies its annual administration fee on self-directed RRSPs below $25,000, you will likely be charged $100. If the plan has only been under the minimum for a month or so, CIBC may overlook it. Not so if it’s been longer.
With the bear market of the past year, many people may have slipped below RRSP thresholds for admin fees. If they have contribution room, they could try topping up their RRSP before the date of record (which varies – e.g. RBC Direct was in June, I believe). They might still see a debit for an administration fee in their account but in the case of CIBC Investor’s Edge, they can call in to have it reversed, so I’m told by a representative. Chances are good the request will be granted, although it’s not assured.
3 Responses to “ Annual fees on RRSPs ”
Excellen point Larry, this is the problem with self-directed RRSPs at the start, if you don’t have a large enough balance, you end up getting KILLED by fees (along with fees for buying things and such), seems diabolical to me.
–C8j
By Big Cajun Man on Aug 8, 2008
BCM
Thanks. Controlling fees is important to the philosophy of passive investing. They add up over time. A $100 yearly fee over the life of a 25-year RRSP is $2,500. And no doubt there could be fee increases, new fees etc.
LM
By Larry MacDonald on Aug 9, 2008
I got dinged by the fee in the last bear market due to falling market value of investments. I probably should have started out with TD e-Series Funds, instead of picking stocks in a starter portfolio.
By Canadian Capitalist on Aug 12, 2008