# RRSP Account Fee Breakeven Point



## Ag Driver (Dec 13, 2012)

Deleted.


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## Beaver101 (Nov 14, 2011)

^ Are you saying that you currently do not have an RRSP? If so, then the company's matching or partially free-money (taxable benefit) should be the no-brainer. 

If not, then I would consider transferring existing RRSP funds to your TDDI RRSP to $25K to get that fee waived first. I think your break-even point on the TDDI RRSP fee is about 2% ($113/$6K). 

And then consider the ROR (not guaranteed) to either RRSP accounts whether mutual funds or ETFS/stocks, etc. 

For the company's plan (group RRSP), you'll be limited to mutual funds with higher MERS than TD e-series but company's matching % should make up for it. 

For your own TDDI RRSP, your investment choices will be wider so it's the custodian fee (~2%) you need to tackle first.


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## Ag Driver (Dec 13, 2012)

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## Eclectic12 (Oct 20, 2010)

In one sense, it is self-directed as one typically has to choose what the $$$ are put into.

Most around here associate self-directed with having a lot more choice for investments (ex. instead of twenty funds, thousands of fund plus potentially bonds/GICs/HISA MFs) as well as the providing firm. In that sense, it is not self-directed.


Even if the choices aren't great ... some have posted on CMF that their plan allows transfers to their individual RRSPs after a set period. So they have their preferred RRSP setup where it is being added to by the transfers.

I believe others have indicated that their employer deposits directly to their individual RRSP but I believe this is rare.


Does your employer have a employee web site that holds the details of the RRSP?
At the least, if the employer has contracted with say SunLife to be the RRSP administrator, there should be a phone line to ask questions, if there isn't a booklet that covers the choices as well as any transfer options.


Questrade could be a good choice as well ... until enough is built up (or a promo is run where one is close enough to the asset threshold) to transfer the Questrade RRSP to TDDI to simplify things. Usually if you approach the receiving institution with "I'd like to transfer but don't like the transfer fee", a lot of the time the receiving institution will pay the transfer fee.


Cheers


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## Retired Peasant (Apr 22, 2013)

Ag Driver said:


> ...
> TDDI RRSP = $100 + tax annual fee.
> My TFSA is not maxed.
> The fee is waved after 25k invested inside an RRSP _only_.


You should take another look - they're changing their fees as of March 15. https://www.td.com/ca/document/PDF/forms/521778.pdf


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## Ag Driver (Dec 13, 2012)

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## Ag Driver (Dec 13, 2012)

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## Ag Driver (Dec 13, 2012)

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## Joe Black (Aug 3, 2015)

Unless I'm misunderstanding to you, as long as the company's contribution at least matches the MER (and I can't imagine that it wouldn't actually be much higher), you are practically guaranteed "free money".

When my company was matching 50%, I wouldn't have cared if the MER was 5%, I was still getting a 45% instant return.


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## Ag Driver (Dec 13, 2012)

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## Eclectic12 (Oct 20, 2010)

Ag Driver said:


> Thanks for the info.


You are welcome ... the nice thing is that it looks like you are being proactive, while TFSA contribution room is still available.

Kicking the tires where one has time to assess the weak spots should result in a better plan.




Ag Driver said:


> As for the Questrade idea and transfer -- I may have already used that life line as TD covered my transfer fee's once already.


TD bank or TD Direct Investing (i.e. old TD Waterhouse)?

Anytime it is taking business off competitor's books, I expect they will at least look at it.


Or maybe you could setup a TD Bank eSeries RRSP ... once that is over the asset limit with enough head room to handle any fluctuations in value, transfer that to a new TDDI RRSP.

There's several choices so don't rush into anything without digesting the info.


Cheers


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## Eclectic12 (Oct 20, 2010)

Ag Driver said:


> I contribute $100 to my RRSP. The company matches 50%. Thus I now have $150 invested. MER aside, with a ROR of 4% that will equate to $156 at the end of the year. At the end of the year, I am charged $113 for the account.
> 
> This leaves me with $43 in hand .....


To use a dated reference ...


> *What you talkin' about Willis?*



The Group RRSP at work that has no employer matching works like this ...

Contribute $100 to the Group RRSP ... pick which of thirty or so MFs to put the $100 into, where MER of 2.3% for all but MM funds.
End of year, funds are worth what they are worth, after MER is deducted ... there is no annual fee as the employer has paid the financial institution to cover it, across all employees.

The only fee that I have paid is not a yearly fee ... it was a fifty dollar "transfer out" fee, which is based on transfers, not yearly.
(I ticked the wrong box to send some OT to the Group RRSP instead of paying out as cash.)


The time I could have had an employer match was a DC pension. Other than a set schedule where 1% of salary from me and 1% of salary employer matching contributions ... same deal with only a transfer out would have anything other than the MF MER.



BTW ... the lack of a yearly fee plus the chance to have the full $1 invested instead of waiting for a tax refund is why some co-workers used the company Group RRSP to build up to the needed assets to qualify for cheaper discount broker commissions.




Ag Driver said:


> There is a point that you must contribute "x amount" in order for it to be worth your while to open up an RRSP account that has fee's associated with it.


For your individual RRSP ... correct.

The deals from the employer will matter but so far, I have never heard of or seen a post from someone where the employee is paying a yearly fee.


Case in point ... that OT mentioned above that accidentally went into the Group RRSP sat there for almost two years before I decided I'd prefer to pull it out. The only reduction was the transfer out fee.


Cheers


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## Beaver101 (Nov 14, 2011)

Eclectic12 said:


> To use a dated reference ...
> 
> *What you talkin' about Willis? *


 ... as per his thread's title - he was trying to figure out or justify the "breakeven" point/cost going with an individual RRSP at TDDI or the company's group RRSP from an investment ROR angle (faulty logic?).


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## Beaver101 (Nov 14, 2011)

Joe Black said:


> Unless I'm misunderstanding to you, as long as the company's contribution at least matches the MER (and I can't imagine that it wouldn't actually be much higher), you are practically guaranteed "free money".
> 
> When my company was matching 50%, I wouldn't have cared if the MER was 5%, I was still *getting a 45% instant return*.


 ... somewhat true but keep in mind the company's matching contribution is considered taxable income (and yes, offset by tax refund) and that there's no guarantee on the ROR on the "funds" in the Group RRSP. The ~45% return would be achieveable if one held MM funds or GICs though.


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## Ag Driver (Dec 13, 2012)

Deleted.


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## Beaver101 (Nov 14, 2011)

^ That's okay, not many people do or get the opportunity to participate in a company's (group) RRSP.

Yes, normally your contribution comes off your paycheque (bi-weekly?) and that gets (along with the company's matching amount) sent to the administration company (most likely an insurance company). So you can't fund it like the way you do with your TDDI account or whenever you want. 

Since your company has announced (or contracted) a company's matching RRSP program, you should be getting more details not only on your account #, online access, etc. but the available investments for you to select, at least an informational session by HR. Investments will generally be limited to mutual funds with MERs (comparable to advisor-series, but definitely lower than retail level) and possibly GICs or a savings account. No stocks or ETFs for you to cowboy around with since your company would want its RRSP program to be around, for the benefit of its employees. The only fee(s) you have to watch out for are transfers out and frequent funds switching (ie. before 30 days).


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## Ag Driver (Dec 13, 2012)

Deleted.


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## Eclectic12 (Oct 20, 2010)

Beaver101 said:


> ... as per his thread's title - he was trying to figure out or justify the "breakeven" point/cost going with an individual RRSP at TDDI or the company's group RRSP from an investment ROR angle (faulty logic?).


I thought I made clear that I understood what the thread question was.

The question at this point of the thread was why the comparison included an annual fee for the company run plan when my experience was that part of the benefit of a company plan was the company covering the annual fee.

So the trade-off is more likely "individual RRSP that won't get company matching that has an annual fee until the asset level is hit" (i.e. TDDI RRSP) versus "company RRSP with combined employee contributions with employer matching that has no annual fee".




Ag Driver said:


> Actually, I guess I didn't fully understand company RRSP's. Faulty logic.


True (a confirmation not a criticism) ... one of the benefits the company is providing, even where there is no company matching funds is that there is no annual fee, regardless of asset level.




Ag Driver said:


> I was under the impression that a company RRSP, for some reason, would be in my account at my broker. If this is not the case -- then I shouldn't have to worry at all if there are no fee's associated with the company plan.


There is a slim possibility this is true ... in which case the cost will matter. However, if you are lucky enough to be in this position where one likes a TD eSeries funds, I believe TD bank offers an RRSP and TDDI used to offer an MF only RRSP for $25 a year.

From what has been posted here on CMF, the more common version is where the funds have to be held at least for a period in the company sponsored RRSP, which typically won't have an annual fee.




Beaver101 said:


> So does this come off my pay cheque?


Except for the matching employer contributions ... I have been able to have a one time set amount, a set amount on each pay cheque and re-direction of overtime to the Group RRSP.


At the end of the day, as mentioned above ... getting the booklet that outlines all of the details from the employer, especially outlining the matching part is key.


Cheers


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## Eclectic12 (Oct 20, 2010)

Ag Driver said:


> Thus thread has be more than helpful learning about individual and company RSP's. Thanks very much guys.
> Once I get further details, I'm sure I will be bombarding with a list to select from!


No worries ... the other thing to confirm is that it is an RRSP and not a DC pension. Most employers prefer the DC pension as the costs can be written off as a business expense. A matching contribution RRSP, on the other hand, I don't believe has this advantage and is a taxable benefit.


Cheers


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## NorthernRaven (Aug 4, 2010)

I know of a corporate Group RRSP plan that is done through RBC. The employer and employee contribution streams actually have separate account #s. The one I know is using RBC (index) mutual funds, but I believe there is an option to have an RBCDI account. With a weekly paycheque the higher MER funds are less of a downside than normal compared to doubled periodic purchase commissions with a brokerage setup, at least for the small amounts involved at the start.


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## Eclectic12 (Oct 20, 2010)

Beaver101 said:


> ^ That's okay, not many people do or get the opportunity to participate in a company's (group) RRSP ...


While having more employees with access to a particular plan does increase the odds of understanding ... buried in the statement is the implication that more people have access means that more people knowing the details. 

While it does increase the chances, my experience is that those who are proactive will find out and most will ignore it.


Case in point ... back in the '90s, all new hires had access to the Group RRSP and those with two years service had access to the DB pension. Few wanted to talk about, let alone understand either of these plans. And that's for a Canadian Life Insurance company where employees were monetarily rewarded for understanding such things.


In any case .... the key question in my mind is what the hold up is for getting the plan details. Usually I've been handed the detailed handbook or directed to the web site that houses it within the first week of being employed (unless maybe there is a vesting period?).

In some cases, when I've asked during the job interview - details were provided as a selling point by the employer.


Cheers


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## Ag Driver (Dec 13, 2012)

I'm piggy backing off of my own thread so it is easy to go back and read some old info. No need to comment on the past info as that was a mess that is now clear.

Here is an update:

I started work in May. Finally, the company has got their **** together and has me signed up with the plan. The plan is 4% matching. They are allowing me to play catch up and backdate the contributions in one shot on a paycheque. 

New Question: Is this 4% before or after taxes?

I religiously contribute 10% after taxes to my TFSA, so now I have to figure out how much I am "over saving" when making this lump sum contribution. I have yet to have the 4% come off a pay cheque, and I am sorting this out before pay day so I can quickly even out my accounts with 4% towards the RRSP and 6% towards the TFSA .... unless the 4% is pre-tax ....

Paging Eclectic12, Paging Eclectic 12.....


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## OnlyMyOpinion (Sep 1, 2013)

You have no info that says? I would guess it is "up to 4% of salary", so 4% pre-tax, or $4k/yr if salary is $100k/yr.


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## Ag Driver (Dec 13, 2012)

OnlyMyOpinion said:


> You have no info that says? I would guess it is "up to 4% of salary", so 4% pre-tax, or $4k/yr if salary is $100k/yr.


This company is a disaster...I have been asking since February just what the actual percentage was, let alone finer details. I'm actually quite upset with how they handled the entire benefits program. 

Thank you, though. I imagined it would be pre-tax, considering it is an RSP.


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## janus10 (Nov 7, 2013)

Ag Driver said:


> This company is a disaster...I have been asking since February just what the actual percentage was, let alone finer details. I'm actually quite upset with how they handled the entire benefits program.
> 
> Thank you, though. I imagined it would be pre-tax, considering it is an RSP.


And you should get some sort of RRSP contribution slips outlining your PAR and what has been contributed to your DPSP and RRSP plans by you and your employer IIRC. It's been a while since I worked for such a generous employer. Sigh...

Up to 4% matching is pretty nice. My last employer that had such a plan gave employees 3% right off the top, AND matched up to 2%. So, you put in 2%, they put in 5%. Double sigh.


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## Beaver101 (Nov 14, 2011)

janus10 said:


> *And you should get some sort of RRSP contribution slips outlining your PAR* and what has been contributed to your DPSP and RRSP plans by you and your employer IIRC. It's been a while since I worked for such a generous employer. Sigh...
> 
> ...


 ... PAR? Why would he get a PAR calculation for a RRSP contribution or matching one?


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## Beaver101 (Nov 14, 2011)

Ag Driver said:


> This company is a disaster...I have been asking since February just what the actual percentage was, let alone finer details. *I'm actually quite upset with how they handled the entire benefits program.
> *
> Thank you, though. I imagined it would be pre-tax, considering it is an RSP.


 ... sounds like you have a dysfunctional HR dep't there or does one exists even? 

Anyhow, company's matching and your contributions are all pre-tax as you've correctly imagined.


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## Ag Driver (Dec 13, 2012)

Beaver101 said:


> ... sounds like you have a dysfunctional HR dep't there or does one exists even?
> 
> Anyhow, company's matching and your contributions are all pre-tax as you've correctly imagined.


First experience with a large company. First experience with HR. And a terrible experience thus far! I'm not pleased with this place, and I'm hoping for a call back for a new job soon enough. 

Thanks! We'll find out if they actually pull the entire contribution amount soon....


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## Beaver101 (Nov 14, 2011)

^ If you enjoy the work and the pay is great (as well as colleagues), just hang in there since the HR is only a small part of the company. I would be more patient with an inept (learning) HR dep't than one that's "experienced" in not meeting the employees' needs (intentionally).


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## twa2w (Mar 5, 2016)

Ag driver. Sounds like what you have is 100% match of up to 4% of your salary( that is gross salary).
So if you elect to contribute 4%, they will put in 4% to match this.

Who are they using to administer this plan? TD, RBC, SUN LIFE, Manulife? Those are the big providers of group plans.

Has your employer put on any restrictions on the plan?

What investment options are available and at what MERs. Big companies can sometimes negotiate very low mer's on group rsp's. Better sometimes in fact than TD e series.

Just remember HR are usually just clerical staff with no knowledge of investments, rsps, etc. Very few people question them and they often have high turnover so very few peoplearound long enough to develop expertise. Also the group rsp maybe new to the company.

Cheers
J


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## janus10 (Nov 7, 2013)

Beaver101 said:


> ... PAR? Why would he get a PAR calculation for a RRSP contribution or matching one?


Did I use the wrong acronym? I was thinking along these lines:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/slps/cmpltng/bx52-eng.html

Again, I used IIRC, because it has been years since I've seen one, but I do remember having to account for my employer's contributions which limited by ability to contribute to my own self-directed RRSP.


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## Ag Driver (Dec 13, 2012)

Well, my pay cheque was deposited and they still screwed it up. The 4% was deducted, but they failed to backdate and deduct the full amount since my start date.....

That being said, I put in my two-weeks notice. Hopefully my final pay cheque will have the entire deductions, and I will be able to transfer out in-kind to my TDDI account. 

My new job will be 5% matching.


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## Beaver101 (Nov 14, 2011)

janus10 said:


> *Did I use the wrong acronym*? I was thinking along these lines:
> http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/slps/cmpltng/bx52-eng.html
> 
> Again, I used IIRC, because it has been years since I've seen one, but I do remember having to account for my employer's contributions which limited by ability to contribute to my own self-directed RRSP.


 ... yes to the question and yes to incorrect even along those lines in the link. PAR = Pension Adjustment Reversal. PA=Pension Adjustment of which is a component to deduct from eligible amount of RRSP contribution. No need to calculate a PA on your own as tax return will provide you with your eligible RRSP contribution amount for the tax year. 

Anyhow, the OP was talking about his company's matching contributions (free $$$) to a group RRSP plan and whether it was advantageous for him to take up on it instead of going alone on an individual RRSP (more flexibility). The PAR doesn't apply here - it applies to a company's pension plan (which may be contributory or not).


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## Beaver101 (Nov 14, 2011)

Ag Driver said:


> Well, my pay cheque was deposited and they still screwed it up. The 4% was deducted, but they failed to backdate and deduct the full amount since my start date.....
> 
> That being said, I put in my two-weeks notice. Hopefully my final pay cheque will have the entire deductions, and I will be able to transfer out in-kind to my TDDI account.
> 
> *My new job will be 5% matching*.


 ... that's even better. :encouragement:


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