Deposits held in a RRSP - CDIC (2024)

FAQs

Deposits held in a RRSP - CDIC? ›

CDIC determines coverage on the basis of who owns the eligible deposits, not who contributes to them. As a result, eligible deposits held in spousal RRSPs will be paid out to the RRSP owners, rather than the contributor, in the event of a member failure.

We insure eligible deposits for up to $100,000 (including principal and interest) at each member institution, for each of the following categories: Deposits held in one name. Deposits held in more than one name (joint deposits) Deposits held in a Registered Retirement Savings Plan (RRSP)

What's protected and why: GICs, term deposit, savings accounts, and chequing accounts are eligible deposit products and therefore are covered for up to $100,000 of CDIC protection. So $100,000 of the eligible $110,000 within the deposits held in one name category are protected.

CDIC coverage does not apply to stocks, bonds or mutual funds, so those investments, which amount to $180,000 of the total $290,000 in the category, are not eligible to be insured by CDIC.

CDIC insures eligible deposits separately up to $100,000. Deposit insurance covers the following types of deposits: savings and chequing accounts.

Like other registered savings plans, RRSPs can hold savings deposits and investments. Qualified investments – allowed to be held in an RRSP – include cash, gold, GICs, bonds, mutual funds, ETFs, and more. Investments that cannot be held in an RRSP include precious metals, commodity.

The CDIC insures up to $100,000 for each depositor in each covered category, while the FDIC insures up to $250,000 for each depositor in each covered category. Each institution also offers coverage of slightly different financial products.

CDIC does not insure mutual funds, stocks, bonds, or ETFs. These financial products may be protected under different regimes.

Use a deposit broker.

Deposit brokers are specialist when it comes to GIC investing. Deposit brokers can help you shop among many different institutions to help you maximize your CDIC coverage. For a list of deposit brokers in Canada, you can visit the Federation of Canadian Independent Deposit Brokers (www.fcidb.com).

2. What is NOT covered? The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investments are purchased at an insured bank.

How safe is RRSP? ›

What's protected and why: Within the insured category of RRSP, the above GIC and term deposit are eligible deposit products and are therefore combined for coverage of up to $100,000 of CDIC protection. So $100,000 of the eligible $110,000 within the RRSP category are protected.

Placing a GIC in an RRSP allows investors to grow their benefits tax-free until withdrawal. Interest earned in a non-registered GIC will be taxed as income, but with a registered GIC, interest earned grows tax-free.

CDIC protects eligible deposits in Canadian and foreign currency for up to $100,000 (Canadian dollars) in each of CDIC's insurance categories. This protection applies to deposits held in registered accounts such as RRSPs and TFSAs and non-registered accounts such as savings, chequing and joint accounts.

FSRA, through the Deposit Insurance Reserve Fund (DIRF), provides coverage of non-registered insurable deposits, such as a chequing or savings accounts, up to a maximum amount of $250,000, while deposits in registered accounts, such as RRSPs or TFSAs, have unlimited coverage.

Therefore, opening accounts at more than one CDIC member bank can provide you with more CDIC insurance coverage in the event that one of your financial institutions fails.

Protecting Your Deposits

CDIC protects eligible deposits to a maximum of $100,000 per depositor and per insured category. Coverage is free and automatic; customers do not have to apply for it. If a member institution failed, CDIC would reimburse insured deposits (including interest) up to $100,000 per insured category.

The GICs in the LIRA, spousal and non-spousal RRSPs in your name are covered within the RRSP insured category – so they are combined ($140,000) and protected up to a limit of $100,000.

Mutual funds, stocks, bonds, and ETFs are not protected by CDIC.

Are my U.S. funds held at a U.S. bank covered by CDIC? No. Foreign currency deposits at foreign financial institutions are not covered by CDIC. American currency in U.S.-based banks may be covered, however, by the Federal Deposit Insurance Corporation (FDIC).