Withdrawing from your RRSP: rules, tax implications, and tips

How to Withdraw from Your RRSP

To make a withdrawal from your RRSP, follow these steps:

1. Log In: Access your plan account on a desktop computer.

2. Navigate to Withdrawals: Click on your name in the top right corner, then select "Withdrawals" from the drop-down menu.

3. Choose Your Account and Amount: Select the account you want to withdraw from. Choose either a full withdrawal or enter the specific amount for a partial withdrawal.

4. Enter Bank Details: Provide your bank account information to receive the funds directly.

Transaction Fees:

• Partial withdrawals: $35 + tax
• Full withdrawals: $75 + tax

Processing Time:

• Withdrawals typically take up to 10 business days to complete.

Special Withdrawals:

If you need to withdraw funds to buy a home under the Home Buyers' Plan (HBP) or for education under the Lifelong Learning Plan (LLP), do not use the portal for these withdrawals. Check out these articles to learn more about HBP and LLP withdrawals.

Can I withdraw funds with the Home Buyers' Plan (HBP)?

Can I withdraw funds with the Lifelong Learning Plan (LLP)?

Tax Implications

Withdrawing from your RRSP before retirement will incur a withholding tax. The rate of this tax depends on the amount you withdraw:

• All Provinces Except Quebec:

  • on amounts up to $5,000: 10% Federal tax
  • on amounts of $5,000 and over, up to and including $15,000: 20% Federal tax
  • on amounts over $15,000: 30% Federal tax

• Quebec Residents:

  • on amounts up to $5,000: 5% Federal + 14% Provincial = 19% Total
  • on amounts of $5,000 and over, up to and including $15,000: 10% Federal + 14% Provincial = 24% Total
  • on amounts over $15,000: 15% Federal + 14% Provincial = 29% Total

In addition, the amount you withdraw will be added to your taxable income for the year, which may increase your tax bill and could move you into a higher tax bracket.

Contribution Room

Any amount you withdraw from your RRSP is lost from your contribution room permanently; you cannot re-contribute this amount in the future.

Employer Contributions

If you are currently "active" in your plan, you might not be able to withdraw employer contributions to your RRSP, and sometimes even your own contributions are restricted. These restrictions are typically lifted when your employment status changes to "terminated."