Bank exit fees on RRSPs and TFSAs are on the way out
Moving your RRSP or TFSA to another institution currently costs about $150 in transfer-out fees, and some banks have raised theirs recently. The federal government has committed to publishing draft regulations prohibiting those fees — along with rules requiring transfers to happen on a timely basis and with clear communication to the customer. It isn't law yet. But the direction is set, and there are things worth doing now.
What's actually being proposed
Three changes, announced as a package aimed at competition in financial services:
| Change | What it means |
|---|---|
| Prohibit transfer fees | No charge to move a registered or investment account to a competitor |
| Require timely transfers | An end to the transfers that mysteriously take six to twelve weeks |
| Require clear information | You get told what's happening and when |
The rationale is competitive, not charitable. A $150 exit fee and an eight-week wait are, functionally, a tax on leaving — and they work. They keep people in expensive mutual funds and with advisors they've outgrown, because the friction of leaving exceeds the annoyance of staying. Removing the friction is the point.
Why this matters more than $150
The fee is not the real cost. The real cost is the behaviour the fee protects.
If you hold a $250,000 RRSP in a fund charging a 2.1% management expense ratio, and a comparable index-based portfolio would charge 0.25%, you are paying roughly $4,600 a year for the privilege. Over the fifteen years between 55 and 70, at a 5% return, that gap compounds into a six-figure difference in what you retire on. The $150 exit fee is a rounding error against it — but it's a visible, immediate rounding error, and visible immediate costs beat invisible compounding ones in almost everybody's decision-making. That's exactly why the fee is effective at keeping you put.
So the honest framing of this regulation isn't "Canadians will save $150." It's "one of the main things stopping Canadians from fixing an expensive portfolio is going away."
What to do before the rules land
You don't have to wait.
Ask the receiving institution to cover it. This is standard. Most brokerages and banks will reimburse transfer-out fees to win your account, typically up to $150 per account and often more for larger balances. It is frequently not advertised — you have to ask, and you usually have to ask before initiating the transfer. Send them the statement showing the fee after the transfer completes.
Transfer in kind, not in cash. An in-kind transfer moves the investments themselves. A cash transfer sells everything, which for a TFSA or RRSP doesn't trigger tax — but it does put you out of the market for however long the transfer takes, and it may trigger deferred sales charges on older mutual funds. Specify in kind unless you actually want to liquidate.
Watch the TFSA trap. A transfer between institutions is not a withdrawal and doesn't affect your contribution room. But if you withdraw the money yourself and re-deposit it at the new bank in the same calendar year, that's a withdrawal followed by a contribution — and if you've already used your room, you've over-contributed and you'll pay a 1%-per-month penalty on the excess. Always use the institution-to-institution transfer form (T2033 for registered plans). Never do it by hand.
One account, one fee. Fees are charged per account, so consolidating three legacy RRSPs at three institutions costs three fees. Once the ban is in force, consolidation gets meaningfully cheaper — and consolidation is worth doing for its own sake, because it's very hard to manage a withdrawal strategy across accounts you've half-forgotten about.
Timing
Draft regulations were committed to for publication, followed by the usual comment period before anything becomes binding. Realistically that means the ban takes effect some time after the drafts appear — not immediately. If you're planning a move in the next few months, assume the fee still applies and negotiate its reimbursement.
If you're consolidating accounts as part of a retirement drawdown plan — which is a good idea, since withdrawal order is much easier to execute when your accounts are in one place — this is a tailwind, not a reason to wait.
Not financial advice. Regulatory status as of publication; confirm current rules before acting. Fee amounts vary by institution.