Question about an RRSP (retirement savings fund) transfer?
I'm 24 years old, and I don't have a retirement savings fund yet. I have a summer job that will match 100% every $100 contribution I make from each pay period to a Standard Life retirement fund. I will be going back to school in the fall, and probably not earning enough to put away for retirement. To avoid management fees eating away at my fund in the fall, I was thinking of transferring it to an ING Retirement Savings Account. I know I will have to pay money for the transfer. The amount saved will approximate $1000. Will I have to pay tax since I'm transferring from one RSP to another? Is there transfer worth it? Or should I keep it in Standard Life? Or should I wait until I finish school (4 years) to open a retirement savings fund?
Public Comments
- You should contact the institution you want to transfer your retirement funds to, they will have you complete the paperwork and then arrange for the transfer as a tax free rollover. If you try to do it on your own, you will trigger a taxable event...
- Most employer retirement plans force you to take a withdrawal if you leave and the balance is below $5,000. Have them send you a check for the full amount made out to "ING FBO your name" (FBO stands for For Benefit Of). You then have 30 days to get that check to ING to open a Rollover IRA. There should be no fees associated with this transaction, and no taxes will be due (assuming you make the ING transaction within 30 days). If there are management fees with the Standard Life plan, then yes, it is worth it to transfer. Otherwise, those fees will eat up any profits and most likey, eat into the priciple as well since it is such a small amount. It's never too early to start saving for retirement. Typically, money left alone will double every eight years (depending on investment choices. Stable, interest bearing accounts will take longer to double). That means if you retire 40 years from now, that $1000 will have grown to $32,000.
