What Happens When I Withdraw from My RRSP?
With an RRSP, contributions are made on a tax-deferred basis, meaning you do not pay taxes on the contributions you make upfront. However, once you begin making withdrawals from your RRSP, those funds will be taxed as income in the year the withdrawal is made.
What’s Deducted from My Withdrawal?
When you withdraw funds from your RRSP, the amount you receive may be subject to a withholding tax, which varies based on the amount being withdrawn and your province of residence. After the withdrawal, the tax is sent directly to the Canada Revenue Agency (CRA) by OneVest's custodian institution managing your RRSP.
In addition to the withholding tax, administration fees for de-registration may apply, depending on the type of withdrawal. These fees are set by OneVest’s custodian institution, CI Investment Services**:
| Account Maintenance (TFSA, RRSP, Spousal RRSP, LIRA, RIF, LIF) | Free* |
| Depositing Cash (EFT, Wire Transfer) | Free* |
| Withdrawing Cash (EFT) | Free |
| Withdrawing Cash (Wire Transfer) | $50 |
| Transferring Investments from Another Financial Institution | Free |
| Partial Transfer Out of Investments to Another Financial Institution | $50 per account |
| Full Transfer Out of Investments to Another Financial Institution | $150 per account |
|
Partial Cash Withdrawal from an RRSP (including withdrawals toward Lifelong Learning Plan or Home Buyer’s Plan) |
$25 |
| Full Cash Withdrawal from an RRSP
|
$50 |
| Stop Payment | $25 |
| Estate Transfer | $250 per account |
* You may be charged by your financial institution for wiring out or receiving a wire.
** $25,000 limit per day.
*** Deregistration of TFSA withdrawals and RIF minimum annual withdrawals are free
Please note, administration fees do not apply to withdrawals of less than $200.
If you make a full withdrawal, OneVest will charge management fees up to the point of withdrawal.
Examples of RRSP Withdrawals:
Partial Withdrawal
For example, a client in Alberta has $5,000 in their RRSP and decides to withdraw $1,000. The withholding tax on this amount would be $100 (10% for amounts up to $5,000). The funds to be deregistered would then be $900. The administration fee would be $25, with sales tax of $1.25 (5% GST in Alberta). The client would receive $873.75.
Full Withdrawal
A client in Ontario has $10,000 in their RRSP and requests to withdraw the entire amount. The withholding tax on this amount would be $2,000 (20% for amounts up to $15,000). The administration fee would be $50, with sales tax of $6 (13% HST in Ontario). Management fees of approximately $6.25 (at an annual rate of 0.75%) would apply, and the client would receive $7,937.25.
Additional RRSP Withdrawal Programs
There are two special programs that allow you to withdraw funds from your RRSP for specific purposes:
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) allows you to withdraw funds from your RRSP to purchase or build a qualifying home.
- You have 15 years to repay the amount withdrawn under the HBP, starting two years after the withdrawal.
- You must purchase or build a home by October 1 of the year after making the withdrawal.
- No withholding tax applies for withdrawals of $35,000 or less.
- In each tax year, you must repay one-fifteenth (1/15) of the total amount withdrawn until the full amount is repaid to your RRSP.
For full details, please refer to the Canada Revenue Agency (CRA) website regarding eligibility, withdrawal, and repayment conditions.
Lifelong Learning Plan (LLP)
The Lifelong Learning Plan (LLP) allows you to withdraw funds from your RRSP to pay for full-time education or training for you, your spouse, or your common-law partner.
- The maximum annual withdrawal is $10,000, and the total lifetime withdrawal limit is $20,000.
- You have up to 10 years to repay LLP withdrawals.
- Typically, you must repay 10% of the total amount withdrawn each year until it is fully repaid. There is no interest charged on these repayments.
- Repayments are considered contributions but cannot be used to reduce your taxable income for the year.
To participate in the LLP, you must have received a written offer to enroll by March of the year following the RRSP withdrawal.
For additional information on eligibility and repayment conditions, please visit the CRA website.
How to Make a Withdrawal
To make a withdrawal for any reason, including through the Home Buyers’ Plan or Lifelong Learning Plan, please reach out to the OneVest support team by submitting a request.
Disclaimers:
Manzil Invest is a strategic partnership between Manzil and OneVest Management Inc (“OneVest”). OneVest offers wealth management products and services to Manzil customers. OneVest Management Inc. is a registered Portfolio Manager in each of the provinces and territories of Canada and as an Investment Fund Manager in the provinces of Alberta, Ontario, Newfoundland and Labrador, and Quebec. Assets in your OneVest accounts are held with various custodians, each registered as an investment dealer with the applicable securities regulators. All custodians are members of the Canadian Investment Regulatory Organization (“CIRO”) and the Canadian Investor Protection Fund (CIPF). OneVest is a wholly-owned subsidiary of OneVest Technologies Inc. All trademarks are the property of their respective owners. OneVest will determine what investments are suitable for you.
This article provides general information for educational purposes only and does not constitute legal, tax, or financial advice. RRSP withdrawals are subject to withholding tax, administration fees, and other charges, which may vary by province. For personalized advice, please consult a tax professional or financial advisor to understand how RRSP withdrawals, including those under the Home Buyers’ Plan or Lifelong Learning Plan, may impact your individual tax situation. Manzil Invest is not responsible for any tax consequences associated with RRSP withdrawals.
