Would combining RRSP accounts save us money?

It may save you in fees but it may not be worth it

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From the Summer 2015 issue of the magazine.

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RRSP accounts

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Q: My wife has her own RRSP and a spousal RRSP I haven’t contributed to for a while. Both accounts hold the same type of mutual funds at the same institution. Would combining these accounts save us on fees?

—Brad Daneliuk, Windsor, Ont.

A: Combining the accounts might help you save investing fees, but I’m not sure it’s worth it. It depends on the mutual fund policies and the amount of money involved. Let’s say you have $50,000 in each RRSP but the threshold to qualify for “premium” funds, and lower your MERs, is $100,000. Combine the accounts and you could reduce your MERs by 0.5%, which would save you $500 in fees per year. But it could lead to complications says Kathryn Del Greco, VP and investment advisor at TD Wealth. “The newly combined account will be considered a spousal account in the eyes of the CRA and the three year attribution rule applies to withdrawals.” Instead, ask your advisor if you can reduce the total fees you pay—a plan that may or may not include combining the accounts. If you’re on your own, consider keeping the accounts separate and focus on low-fee mutual funds or exchange-traded funds to lower your MERs.

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One comment on “Would combining RRSP accounts save us money?

  1. I’m not sure if Bruce will follow up, but my question is, does the attribution rule even apply in this case? What if the last time Brad contributed to his wife’s spousal RRSP was several (more than 3) years ago? If the accounts are combined, the contribution records indicate that Brad’s last contribution was in 2010, for example, and any contributions subsequent to 2010 were made only by his wife, isn’t attribution a non-issue? Thanks.

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