THE Feb. 29 deadline for contributing for 2011 is almost here.
After that the interest in RRSPs tends to fade for another year. So make sure you organize your plan(s) most effectively now.
In fact, this might be a good time to bargain for a lower or no fee if you set up a self-directed plan and transfer your money into it.
Having several individual RRSPs is like owning several houses. If you want to change a plan (e.g. put the money into a mutual fund instead of a term deposit, or vice versa) that's like selling one of your houses and buying another: costly, time-consuming.
Having a self-directed plan is like owning a single house, with your different RRSP investments in different rooms. Changing RRSP investments then is as simple and inexpensive as moving furniture from one room to another.
The single statement from the self-directed RRSP trustee shows all your RRSP investments.
It's much easier to keep track of what's happening, just as it's easier to check the rooms in one house instead of having to deal with each of several houses.
And when it comes time to convert your RRSP to an RRIF, for example, your self-directed plan continues to make both the conversion and the ongoing management simpler and easier than having several different plans.
Allow time to transfer various individual RRSPs into a single self-directed plan. You might have to wait for a term deposit to mature, for example.
So don't set up any more individual plans, and the sooner you start the transfer process the better.
The self-directed RRSP company usually provides you with the paperwork and oversees these transfers.
Finally, if you don't have time right now to deal with all this, at least make your RRSP contribution before the deadline so you can claim the tax deduction for last year. Perhaps put the money into a cash account RRSP until you reorganize your plans.
Mike Grenby is a columnist and independent personal financial advisor. He'll answer questions in this column as space allows but cannot reply personally. Email: [email protected].
