Wednesday, March 18, 1992 ~- North Shore News ~ 47

Now’s the time to simplify RRSP matters

AS YOUR RRSPs proliferate, are you beginning to groan
at the growing volume of paperwork,
keeping track of everything, the new fees and other

restrictions?

The registered retirement sav-
ings plan promotion season is over
for another year. But if you, like
many pecple, have more than one
plan — some deposits with one
company, perhaps a mutual fund
with another — perhaps now is
the time to simplify matters.

Most RRSP-holders have guar-
anteed plans, with term deposits
and sometimes bonds, bond
mutual funds or other income in-
struments. If you deal with several
financial institutions, you receive
a varicty of statements — all dif-
ferent and many hard to under-
stand.

Let’s clarify the difference be-

tween (1) the kind of RRSP GIC.

you can buy from a financial in-
stitution and (2) a GIC held in a
self-directed RRSP.

(1) When you walk into ycur
bank (trust company, credit
- union, etc.) and open or add more

money to your (or a spousal)
“RRSP, chances are you put that
_money ‘into a term deposit or
- GIC. That deposit is registered as

an RRSP. So you have an RRSP

GIC.

«-%Nhen the deposit matures, you

‘youew it for another term — or
“possibly transfer the money if you
have exceeded the deposit in-
* surance limit with that institution
. or have- found a more competitive
company.

.That’s ‘when you run into delays
that will cost you lost interest and
possibly closing-out or transfering
fees. Don’t expect the company

you are leaving to be overly coop-

erative...
*. 7@) On the other hand, if you
have .a self-directed RRSP, you
simply _ contribute. money to the
plan. That money is then used to
buy a regular GIC. So you have a
GIC in an RRSP. (Of course, you
* .may also biy amy other invest-
.’ ment that qualifies for an RRSP.)
‘When a deposit in the self-
directed plan-matures, the cash is

. immediately available- for .

reinvestment — just as it is when
anon-RRSP deposit matures... .

_.And_ because. more investment
; options are available, it’s easier to
maximize .- the safety - of your
money — investing in Treasury

| Make sure
your return:
isnot delayed

bills,

Michael

DOLLARS AND SENSE

government of Canada
bonds, Canada Savings Bonds or
mortgage-backed securities,
example, all of which are backed
at the federal level without limit.

A self-directed RRSP used to

the challenge of

for -

be for only sophisticated in-
vestors, who actively managed
their portfolios. But today, at
least one company offers a no-fee
self-directed plan to held income
instruments like GICs and bonds.

The Richardson Greenshields
plan requires an initial minimum
balance of $7,500.

“1 think we’re unique in the in-
dustry with this no-fee plan,’’
said David Motion, vice-president
and resident manager.

While most self-directed plans
cost between $125 and $200 a
year, some have a reduced fee if
you hold only Canada Savings
Bonds and perhaps other income
investments. Or you might be able
to lower a regular fee through
negotiation.

“Our no-fee plan originally at-

tracted sophisticated investors,”’
Motion said. ‘‘Now we find peo-
ple have perhaps a dozen RRSPs
and the paperwork drives them
crazy. We offer a no-risk way for
them to consolidate these plans.’*
Reorganizing and _ simplifying
can take a while. If you have

RRSP GICs maturing over the -

next five years, for example, it
will take five years before all the
money has been transferred into

You Have Worked Hard
To Build Your Business!

-Have you developed a

pian to effectively carry

your business to the next

generation?

" Paul Milley
BSc., C.L.U., CH.E.C.

688-7208

“Advice is only as good as the person you ask...”

ZLOTNIK, LAMB & COMPANY

Estate Planning and Life Insurance Specialists
1200 Park Place, 666 Burrard Street
Vancouver, B.C. V6C 2X8

(604)688-7208 Tol! Free Line 1-800- 663-3171

Lots of people fill out their tax retum with great care, -
only to miss details that, surprisingly, can make all
the difference. For example, if your address is. .
incorrect or incomplete, your refund could be
delayed or sent to the wrong place. If you will be
moving, write the new address on your return, or if .
you don’t know it yet, please call to let us know as
soon as you can so we can update your file.

Another important detail is attaching all the slips

your self-directed plan.

Make sure the person dealing
with your self-directed plan ar-
ranges to have the transfers take
place so little or no interest is lost.
If $50,000 takes three weeks to be
transferred, at 8% interest you
will lose about $230.

Plan the transfers to minimize
fees. Let’s say you have three de-
posits maturing in January and
February, for example, and each
transfer costs $25. Depending on
interest rates and the amount of

MANAGING
success

money involved, perhaps con-
solidate the funds as they mature
into a daily interest account and
then make a single transfer to
your self-directed pian.

As you near the age 71 deadline
for deregistering your RRSPs,
again it’s simpler to have al! your
funds under one tax-sheltered
roof. That will make transfers to
a registered retirement income
fund easier and cheaper.

You can then have a self-

See Simpler page 30

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