Hold your RRSP at Interactive Brokers!

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travesty
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Hold your RRSP at Interactive Brokers!

Post by travesty »

Wouldn't you like to be able to? Well if you are an existing customer, you probably know very well that you can't, and I'm not here to tell that this is about to change, unfortunately.

However, you can help move things along by voting for this change in the IB features poll. There is a company that actually responds to its users (within the constraints imposed by its bargain basement business model) - many of the highly voted features have been implemented in the past. We'd probably need 100+ votes to get this through, and it is not out of the question as they've said they may look at allowing RRSPs in the past.

Vote here. You need to be a customer already, and you need to get a voting username and password from User Management->Voting Subscription in the account management application (but if you just try to vote it will explain all this).

Get voting and have some real choice for your RRSP account!
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newguy
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Re: Hold your RRSP at Interactive Brokers!

Post by newguy »

travesty wrote:Wouldn't you like to be able to? ....
Get voting and have some real choice for your RRSP account!
You realize this has been going on for years. I've voted before and will again, but good luck.

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Post by mw »

They've had a poll up for years, literally. I think I asked IB the first time about seven years ago. I don't think you'll ever see them open up RRSP accounts.
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Re: Hold your RRSP at Interactive Brokers!

Post by Kirkx »

IB's model is to perform all account maintenance electronically. At this time RRSPs require lots of manual back office involvement, that's why Big5 brokers charge $100-200 per year in administration fees. Until all RRSP processing can get fully automated I wouldn't hold much hope for IB offering them.
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Re: Hold your RRSP at Interactive Brokers!

Post by travesty »

I know it is a long shot, but I figure we might as well try. They did it for 401k/IRA in the states, so maybe once they get to 10 times the size or market penetration, it will be worth it to do it for RRSPs, as well.

Kirkx wrote:IB's model is to perform all account maintenance electronically. At this time RRSPs require lots of manual back office involvement, that's why Big5 brokers charge $100-200 per year in administration fees. Until all RRSP processing can get fully automated I wouldn't hold much hope for IB offering them.
Most Big5 brokers charge little to no fees as long as you have some relatively small minimum level of assets, AFAIK. Most charge no fees at all for the TFSA, which presumably involves a nearly identical level of paperwork.
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AltaRed
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Re: Hold your RRSP at Interactive Brokers!

Post by AltaRed »

I have yet to pay an administration fee at a discount broker for my RRSP and my TFSA.
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Re: Hold your RRSP at Interactive Brokers!

Post by fundamental »

Well, never say never......... it took a lot of our collective efforts but IB has finally come around and launched RSP and TFSA Accounts in Canada !

RSPs & TFSAs at IB

At first glance, there appears to be an unfortunate $50 annual "maintenance" fee on the RSP account.
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newguy
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Re: Hold your RRSP at Interactive Brokers!

Post by newguy »

Who's going to be our first guinea pig?

I wouldn't worry about the fee if it's not in addition to the regular account fees. For some it would be less than the $120 or so 'normal' inactivity fee. The question is will you save it back on all the FX fees.

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Re: Hold your RRSP at Interactive Brokers!

Post by optionable68 »

newguy wrote:Who's going to be our first guinea pig?
I am very tempted, however the maintenance fees are somewhat discouraging for infrequent registered traders (like me), especially since other brokerages will pay the transfer fees and/or have promos for $500 worth of free trades etc.

I also suspect IB may have a few initial bugs as they adapt to Canadian registered plans and the nuances that come with them.

Hopefully someone at FWF sets up an account and lets us know their experience
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Re: Hold your RRSP at Interactive Brokers!

Post by Yoder »

Is margin allowed in an RRSP account? (i.e. forex margin - like they do on a normal account?) Or do they automatically do the CAN->US$ conversion when you purchase an american security...?
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Re: Hold your RRSP at Interactive Brokers!

Post by queerasmoi »

Yeah those account & inactivity fees are still something that would discourage anyone who is not specifically looking to do a bunch of trades. Really good if you need to make those trades though. Is there a use case for IB with long-term investors given these fee minimums?

Questrade's fee structure still works well for my buy-hold-rebalance portfolio especially with free ETF buys. Virtual Brokers is even cheaper on commissions but not all the ETFs I buy are on their freebie list and they charge $50/year for USD RRSP so on the balance I probably still do better with Questrade.
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Re: Hold your RRSP at Interactive Brokers!

Post by avrex »

A RRSP at IB is indeed good news. :)
fundamental wrote:there appears to be an unfortunate $50 annual "maintenance" fee on the RSP account.
newguy wrote:...regular account fees. For some it would be less than the $120 or so 'normal' inactivity fee.
Agreed. These fees aren't a good thing.
The RRSP at IB might only be useful for those that are frequent traders, who can take advantage of IB's low-fee commission structure.

Please note that the $10/month ($120 annual) Market Data Bundle is optional and not mandatory.

If you're not a frequent trader, you can always do this a cheaper way. You could always obtain market data (quotes) from another source (perhaps if you have other discount brokerage accounts with TD, BMO, etc.) Here's another alternative. I have two accounts at IB (one for me and one for my wife). I only apply the optional Market Data Bundle to one account. This saves me some money.
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Re: Hold your RRSP at Interactive Brokers!

Post by Park »

This is what you can trade in an RRSP or TFSA at IB:

Stocks listed on designated US and Canadian exchanges
Long call equity options resulting in a stock position on a qualified investment.
Long put equity options resulting in a stock position on a qualified investment.
Short call equity options with a fully covered position on a qualified underlying stock ( covered call ).
Long put equity options with a fully covered position on a qualified underlying stock ( protective put ).
Long put/call options on indices.
Warrants if the underlying asset acquired under the right to purchase is a qualified investment.
Installment Receipts reflecting a partial payment on a share listed on a designated stock exchange.
Rights if the underlying asset acquired under the right to purchase is a qualified investment.
U.S. Bonds.
FX conversions limited to USD/CAD

The following are not allowed:

Leveraged FX (LEVFX).
Futures.
Future options.
Short selling on stocks, equity, and index options ( other than covered calls ).
Over-the-counter bulletin board (OTCBB).
Pink Sheet stocks.
Contract for Difference (CFD)
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Re: Hold your RRSP at Interactive Brokers!

Post by Benchwarmer »

The RRSP does seem costly. US $120 for account minimum, US $120 for quotes, $50 for admin. That works out to $350 per year. I am currently paying zero at RBC (but of course their stock trades are $10).

You cannot get the RRSP account without a regular account, so that could add another US$120, for a total of $503 per year. You would have to do a lot of trades to break even.

The TFSA does not have the $50 annual fee.
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Re: Hold your RRSP at Interactive Brokers!

Post by DenisD »

I think the monthly activity fee is waived if the account is worth more than US$100k.
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Re: Hold your RRSP at Interactive Brokers!

Post by Park »

International trading is a strength of IB. I was disappointed that they don't offer it in RRSP/TFSA accounts.
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Re: Hold your RRSP at Interactive Brokers!

Post by travesty »

It looks like the impossible became possible. The fees are a bit discouraging, however. Still - the $10 a month fee is waived if you have more than 100k.

The data fee is optional. If you are a buy and hold investor (I fall into this category), you don't need data - you can just grab it from any non-delayed source when you do need to trade, or just stick to market orders in the middle of the day for high-volume stocks. If you do trade a lot, well then the rock-bottom IB commissions and quality tools probably pay for themselves.

So given that then you are left with the $50 annual fee as the main blocker as I see it.

I didn't switch to IB for my RRSP, despite eagerly awaiting this development, largely because of the $50 fee. However, recently I was moving some money into and around inside my Scotia iTrade RRSP, and I realized a big reason you'd want to move to IB, even if you are a buy-and-holder, is to get the great USD treatment.

USD stocks, bongs and ETFs are often key holdings in RRSPs, you avoid the otherwise unavoidable US withholding, and income from these guys is fully taxed. You'll usually find these at or near the top of lists of most suitable RRSP investments.

At Scotia I have this "USD friendly" option enabled, which lets me trade in USD stocks with no commission. They still charge you their 1.65% vig on currency conversions from dividends, however. So if you have 200k in your RRSP with 3% dividends, that's another $100 transferred from your side of the ledger to Scotia's. That's on top of the $30/quarter Scotia charges you for the USD friendly option. You can toggle that on and off, depending on when you trade, but you'll probably have it on at least a couple of quarters a year. So you are looking at say $160-220/yr in fees at Scotia, depending on how much you toggle on the USD friendly option.

If you don't use the USD option, you are likely going to pay more than that just while converting your incoming contributions, and stuff like rebalancing or retargetting to lower MER ETFs can leave you out $1,000s all at once.

I'm not totally familiar with the USD options at other brokers, but I remember when Scotia's came out none of the other big 5 offered something as comprehensive (TD had some kind of call-in wash trade feature IIRC? same limitations though). Has it changed?

Seriously re-considering IB based on this analysis.
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Re: Hold your RRSP at Interactive Brokers!

Post by AltaRed »

FWIW, iTrade tells me it will most likely be 2017 before they have a fully true USD RRSP option. I've told them a few times this is likely the most critical flaw in their offering and they have been asleep at the wheel.
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Re: Hold your RRSP at Interactive Brokers!

Post by DenisD »

TDDI doesn't use the automatic wash trade any more. They have separate CAD and USD subaccounts in RSPs. But you have to call in to journal securities from one subaccount to the other. If you call to ask a rep to complete your NG immediately, he may insist on charging you the broker assisted fee. The only way to guarantee the $9.99 fee is to use DLR/DLR.U and wait for the journal.

I think BMO and RBC let you do it all online with no assistance in separate subaccounts.
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Re: Hold your RRSP at Interactive Brokers!

Post by pmj »

DenisD wrote:TDDI doesn't use the automatic wash trade any more. They have separate CAD and USD subaccounts in RSPs. But you have to call in to journal securities from one subaccount to the other. If you call to ask a rep to complete your NG immediately, he may insist on charging you the broker assisted fee. The only way to guarantee the $9.99 fee is to use DLR/DLR.U and wait for the journal.
Or use any dual-listed stock you already own that you have previously journalled to the other side.
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Re: Hold your RRSP at Interactive Brokers!

Post by travesty »

So TD, BMO and RBC all offer US subaccounts and dividends (and other US source income) stays in USD?
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Post by DenisD »

Yes for TD and RBC and, I assume, BMO.
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Re: Hold your RRSP at Interactive Brokers!

Post by queerasmoi »

travesty wrote: USD stocks, bongs and ETFs are often key holdings in RRSPs, you avoid the otherwise unavoidable US withholding, and income from these guys is fully taxed. You'll usually find these at or near the top of lists of most suitable RRSP investments.
I didn't know you could put bongs in your RRSP but they are definitely a growth industry with legalization on the horizon :rofl:
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Re: Hold your RRSP at Interactive Brokers!

Post by travesty »

Heh, oops. I guess that explains why the income side of my portfolio has been performing somewhat lazily...
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Re: Hold your RRSP at Interactive Brokers!

Post by InvestorNewb »

AltaRed wrote:I have yet to pay an administration fee at a discount broker for my RRSP and my TFSA.
Same with me.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
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