Is Transferring Your RRSP for a Bonus in 2025 Worth It? When it comes to your retirement savings, every dollar counts. If you’ve heard about RRSP transfer bonuses being offered by financial institutions in 2025 you might be wondering if making the switch is right for you. While these offers seem tempting, there are some things to consider before you jump in. Let’s break it down so you can make an informed decision.
What Are RRSP Transfer Bonuses?
An RRSP transfer bonus is a promotional offer from banks, credit unions or online investment platforms to get you to move your retirement savings from one institution to another. These bonuses are usually 1% to 5% of the amount transferred.
For example:
- If you transfer $100,000 to a new provider with a 2% bonus you’ll get $2,000 as an incentive.
But these bonuses often come with conditions such as:
- A minimum balance requirement.
- Holding period (e.g. you have to keep your money with the new provider for 12-24 months).
- Limited investment options that may impact long term growth.
- Higher management fees that may outweigh the bonus benefits.
- Withdrawal penalties if you access your funds early.
Before you dive in, you need to weigh the pros and cons.
Pros and Cons of Transferring Your RRSP for a Bonus
Pros Of RRSP Transfer Bonus
✔ Better Options : Lower fees and higher returns than your current institution.
✔ Consolidation : Move multiple RRSPs to one provider.
✔ Fee Reimbursement : Some banks will cover transfer fees charged by your previous institution.
✔ Modern Tools : Newer platforms have better technology, reporting and financial planning tools.
✔ Tax Efficiency : More tax efficient investment options to grow your retirement.
✔ Free Money : Extra money from the bonus.
Cons Of RRSP Transfer Bonus
✖ Transfer Fees : Most institutions charge $100–$150 per account for outgoing transfers.
✖ Bonus Restrictions : Bonus may not be paid upfront and could be distributed over 1–2 years.
✖ Tax Considerations : Direct transfers between RRSP accounts are tax free but the bonus itself may be taxable income.
✖ Limited Options : Fewer investment options which could limit portfolio growth.
✖ Hidden Costs : Administrative or inactivity fees at the new provider could reduce the bonus benefit.
✖ No Personal Advice : Switching from a full service brokerage to a low cost online platform may mean losing access to personalized financial advice.
How to Transfer Your RRSP for a Bonus?
If you decide to go ahead follow these steps to make it a smooth process:
Step 1: Compare Financial Institutions
Research different providers to find one that offers:
- Competitive bonuses.
- Low management fees (MERs) for mutual funds or ETFs.
- Good investment options for your goals.
- Good customer reviews and reliable service.
- Modern tools and mobile app if you prefer digital management.
Step 2: Check Transfer Fees & Reimbursement Policies
Most institutions charge a transfer-out fee (usually $100–$150) but some will reimburse this if you meet their requirements. Look for:
- Minimum transfer amounts (e.g. $25,000–$50,000).
- Processing times for reimbursement.
- Hidden fees like inactivity charges.
Step 3: Understand Bonus Terms and Conditions
Read the fine print:
- How long do you have to keep your money with the new provider?
- When and how will the bonus be paid?
- Are there restrictions on investment choices?
- Will withdrawing funds early void your bonus?
Step 4: Initiate a Direct Transfer
Make sure you request a direct transfer (trustee-to-trustee) to avoid taxable withdrawals. Don’t cash out your RRSP, it will be considered taxable income. Confirm all funds and investments are transferred correctly and keep a copy of your transfer request for tracking purposes.
Step 5: Monitor Your New Account
After the transfer, double check:
- That your investments are allocated properly.
- That your bonus is credited as promised.
- That you like the new platform.
Things to Consider Before Transferring
1. Value of the Bonus vs. Fees
Weigh the bonus against the costs (transfer fee or higher management fees at the new provider). Make sure the bonus covers those costs.
2. Investment Options and Costs
Compare the investment options at your current provider vs the new one. Lower fees and better options = more growth over time.
3. Tax Implications
The transfer itself is not taxable but the bonus may be considered taxable income. Factor that in.
4. Long Term Financial Goals
Does the new provider align with your retirement strategy? If not, the bonus may not be worth the hassle.
FAQs
1. Is an RRSP transfer bonus taxable?
No, a direct transfer between institutions is not taxable. But the bonus may be taxed as income.
2. How long does an RRSP transfer bonus take?
2 to 4 weeks, sometimes up to 6 weeks.
3. Can I cash out the bonus?
Most institutions require you to keep your money invested for 12–24 months before the bonus is fully vested.
4. Are there penalties for transferring an RRSP?
Only the transfer-out fee from your current institution (usually $100–$150) unless your new provider reimburses it.
5. Should I move my RRSP to a TFSA for better returns?
That depends on your goals. RRSPs are tax deferred, TFSAs are tax free. If you’re closer to retirement, keeping funds in an RRSP might make sense. If you expect to be in a lower tax bracket later, an RRSP withdrawal strategy might be better.