Comments on: Weekend Reading – March 21, 2008

By: Hannah

Hannah — Sat, 22 Mar 2008 13:53:44 +0000

Good reads for sure!

I’m with David on this one: I’ve never seen an RSP plan set up so that it’s more difficult to withdraw funds when leaving than it’s worth!

By: Four Pillars

Four Pillars — Fri, 21 Mar 2008 18:38:11 +0000

I agree with David – it’s only defined benefit pensions that typically have to stay in locked in accounts such as a LIRA.

I like the fun contests but quite frankly can do without a Kiyosaki book. )

Have a great long weekend.

Mike

By: My Dollar Plan

My Dollar Plan — Fri, 21 Mar 2008 18:05:53 +0000

Thanks for the mention! If I have time, I would do the reading for a contest, but it all depends on what is going on at that moment!

By: DAvid

DAvid — Fri, 21 Mar 2008 17:14:06 +0000

FT,
I can’t speak to your plan, but most Group RSPs fall under your control as soon as you leave the Company. There may be a requirement that some or all of the RSP remain in a ‘locked-in’ product, but you have the choice of the investment vehicles within. Even a LIRA is controlled by you as far as the investment vehicles is concerned.

Also, don’t just look at MERs, assess the return of the product. Some actually do outperform the index on a consistent basis.

DAvid

References:

Concordia University:
* transfer your Group RSP to the Canada Life Universal RSP, where you’ll continue to enjoy the same investment options and Canada Life service; or
* transfer your Group RSP balance to another RRSP at a financial institution; or
* withdraw your Group RSP account balance in cash (this amount will be included in your taxable income for that year and tax will be withheld from the payment).

Fidelity Investments:
Contributions your employer makes on your behalf to the Group RSP become vested immediately. That’s right! You own your employer’s contributions right away. So when you leave the company, you will be taking your contributions, any matching employer contributions and any investment earnings with you.

Ken MacCoy:
When you make a contribution to a group RRSP there is no question about who owns the contibution and what you can or can’t do with it. You can do what ever you want with it – transfer it, redeem it, add to it. Note: There may be some locking-in provisions or restrictions on the transfer of amounts contributed by your employer.

By: Mr. Cheap

Mr. Cheap — Fri, 21 Mar 2008 15:30:50 +0000

Thanks for the link. :-)

By: FrugalTrader

FrugalTrader — Fri, 21 Mar 2008 15:07:33 +0000

David,

I should have explained that a bit more. Free money is free money, but if your existing work based RRSP plan is poor (like mine, all MERS > 2%), then switching jobs would mean ceasing deposits into that account. From there, the account would either sit there, or converted into a LIRA when you get older.

By: DAvid

DAvid — Fri, 21 Mar 2008 13:57:24 +0000

FT said: “however, there is an inconvenience factor if you were to change jobs.”

This would be a very poor reason to not consider participating in a matching RSP program. There are lots of ‘inconveniences’ when switching jobs. This one should be no more difficult than switching your payroll deposit information.

DAvid

By: Canadian Capitalist

Canadian Capitalist — Fri, 21 Mar 2008 12:37:42 +0000

Thanks for the link FT. Happy Easter!

By: The Financial Blogger

The Financial Blogger — Fri, 21 Mar 2008 11:09:05 +0000

thx for the mention FT!
I’m glad my blog is back to life!