Thank you for your video. According to the CRA website: When you withdraw funds from an RRSP, your financial institution withholds the tax. The rates depend on your residency and the amount you withdraw. For residents of Canada, the rates are: 10% (5% in Quebec) on amounts up to $5,000 20% (10% in Quebec) on amounts of $5,000 and over, up to and including $15,000 30% (15% in Quebec) on amounts over $15,000 It's a bit confusing. I live in Ontario and I need to withdraw $5000 from my RRSP account. The tax amount that will be withheld by my financial instituion will be $500 (10% of $5000) or $1000 (20% of $5000)? In other words, the tax is deducted @ 10% upto and including 5000 or upto $4999? Could you please clarify this? Location 00:40 - Very confusing. Could you please let me know the tax amounts withheld in these three scenarios in Ontario: Senario 1: RRSP Withdrawal of $4999.00 - Tax amount withheld? Senario 2: RRSP Withdrawal of $5000.00 - Tax amount withheld? Senario 1: RRSP Withdrawal of $5001.00 - Tax amount withheld? Thanks so much for your time and for your awesome videos!
I have self directed RRSP and self directed RRIF/LIF accounts. If withdrawals are within a 3 month period, they are considered as one lump-sum for the purpose of calculating minimum with holding tax. There is an admin fee of $25 + HST per withdrawal from RRSP and no admin fee for withdrawal from RRIF/LIF. LIF ((Life Income Fund, from Locked-in RRSP) is similar to RRIF but with minimum and maximum withdrawals each year whereas RRIF has minimum withdrawal only. There is no withholding tax on RRIF/LIF on minimum withdrawals unless you request for tax withholding. Minimum withdrawal amount is a percentage amount calculated from the final day balance amount of the account from the previous year. As soon as you take a lump-sum withdrawal from the RRIF/LIF account, subsequent minimum withdrawals will be subjected to tax withholdings as well.
Thank you for the information. One topic that never gets discussed in any video related to RRSP to RRIF conversion from my searches on RUclips, an idea for a future video and possibly you could explain this. Assume you have seven stocks in your RRIF that pay dividends with a yearly yield of 20K and you have requested the institution pay a monthly amount of $2K per month = 24K per year. Where does the additional 4K per year come from, who decides which stocks need to be sold to fund the additional 4K? Is the expectation that the individual has to track this and sell a certain stock to make up for the shortfall or does the institution decide on behalf of the individual which stocks get sold? Also, im not sure you are aware but your web-site under "fees" a message comes up with "page not found"??
I've been drawing down my RRSP since I retired at 55 at a rate of $100K a year. Best to draw the funds in December so as to avoid giving the government an interest free loan of $30K. I estimate it will take me 10-years to withdraw all the RSP funds to avoid the OAS clawback when I reach 65 years old.
@@Adamatthebeach007 ..... I saved approx 37% in taxes when I made the RRSP contribution, plus years of tax free growth. I only pay 20% marginal tax rate on withdrawal. You'll have to show me the math that supports your suggestion.
It’s my understanding and I’ve done this but you don’t have to withhold that %, you can request an amount that’s different. I had them lower the amount of withholding tax.
@@jjlad5037 Thanks. But any transfer (in kind or in cash) is considered a withdrawal and will be taxable except under certain specific conditions. My original question was whether it can be done in kind and I will pay the tax at the end of the year instead of the bank deducting a withholding tax at the time of transfer.
@@K4Financial ...my broker had no issues doing transfers in kind for me. No withholding or cap gain issues at all. My RRSP is now all cash making melting down easy.
@@radosuites7058 just remember, if funds in the spousal RSP are withdrawn within three years of the contribution the income will be taxed in the contributions name.
Thanks, Kent, for the concise explanations. One question I still have in regards to withdrawals: if I’m NOT 71 years old yet, can I contribute to my RRSP (up to my limit), say in December, and then withdraw a smaller amount from that same RRSP in the next consecutive year? I know there is a « 3 year rule » that applies to spousal contributions, hence my question…Thanks
Sure, but it won’t make sense unless you can pull it out at a lower tax rate than what you got as a refund when you put it in. There’s certainly a case to put in a good chunk in your last working year.
You can't beat them. You join them. Own the banks. If you have 50K in RRSP, invest in all six Canadian banks. You will be laughing all the way to the bank.
You should be able to leave your money in your rrsp and withdraw it as needed instead of having to withdraw it aS mandated in a rif . That seems fair to me.
Darling it's called tax deferred income on the RRSP if you invest in RRSP the govt gives you a tax credit back for the Tax bracket you are in, si in short no tax paid for the investment plus growth. When you take it out you are taxed but had the tax deferred in the first place, and gained interest..so it's a great idea to invest in RRSP
@@jovicrazed Yep....some people just don't get it....they pay NO pax on the income if they invest it in an RRSP.....AND they pay NO tax on the capital gain realized inside that RRSP......it's a BLOODY GIFT....How some people call it a "tax grab" when they take it out....or pay tax on a RRIF when they die.....is ridiculous!!! Heck, when somebody dies their RRIF could be worth a million dollars or it could be 100 bucks.....the government is taking all the risk here.....and STILL they complain????? NUTS!
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Thank you for your video.
According to the CRA website:
When you withdraw funds from an RRSP, your financial institution withholds the tax. The rates depend on your residency and the amount you withdraw. For residents of Canada, the rates are:
10% (5% in Quebec) on amounts up to $5,000
20% (10% in Quebec) on amounts of $5,000 and over, up to and including $15,000
30% (15% in Quebec) on amounts over $15,000
It's a bit confusing. I live in Ontario and I need to withdraw $5000 from my RRSP account. The tax amount that will be withheld by my financial instituion will be $500 (10% of $5000) or $1000 (20% of $5000)? In other words, the tax is deducted @ 10% upto and including 5000 or upto $4999? Could you please clarify this?
Location 00:40 - Very confusing. Could you please let me know the tax amounts withheld in these three scenarios in Ontario:
Senario 1: RRSP Withdrawal of $4999.00 - Tax amount withheld?
Senario 2: RRSP Withdrawal of $5000.00 - Tax amount withheld?
Senario 1: RRSP Withdrawal of $5001.00 - Tax amount withheld?
Thanks so much for your time and for your awesome videos!
True Kent. Lots of people try to short the system but it will catch up in time. I don't like lending the government money either...
Another great video Kent! Easy to understand.Cheers!
I have self directed RRSP and self directed RRIF/LIF accounts. If withdrawals are within a 3 month period, they are considered as one lump-sum for the purpose of calculating minimum with holding tax. There is an admin fee of $25 + HST per withdrawal from RRSP and no admin fee for withdrawal from RRIF/LIF. LIF ((Life Income Fund, from Locked-in RRSP) is similar to RRIF but with minimum and maximum withdrawals each year whereas RRIF has minimum withdrawal only. There is no withholding tax on RRIF/LIF on minimum withdrawals unless you request for tax withholding. Minimum withdrawal amount is a percentage amount calculated from the final day balance amount of the account from the previous year. As soon as you take a lump-sum withdrawal from the RRIF/LIF account, subsequent minimum withdrawals will be subjected to tax withholdings as well.
Thank you for the information. One topic that never gets discussed in any video related to RRSP to RRIF conversion from my searches on RUclips, an idea for a future video and possibly you could explain this. Assume you have seven stocks in your RRIF that pay dividends with a yearly yield of 20K and you have requested the institution pay a monthly amount of $2K per month = 24K per year. Where does the additional 4K per year come from, who decides which stocks need to be sold to fund the additional 4K? Is the expectation that the individual has to track this and sell a certain stock to make up for the shortfall or does the institution decide on behalf of the individual which stocks get sold? Also, im not sure you are aware but your web-site under "fees" a message comes up with "page not found"??
I've been drawing down my RRSP since I retired at 55 at a rate of $100K a year. Best to draw the funds in December so as to avoid giving the government an interest free loan of $30K. I estimate it will take me 10-years to withdraw all the RSP funds to avoid the OAS clawback when I reach 65 years old.
So you end paying how much on that 100k?
@@Moski369 ...about half the taxes I would have paid on the initial contribution and the income it produced tax-free.
If you took less every year, you would pay less tax in a lower bracket. Probably much less than what you would make on OAC.
@@Adamatthebeach007 ..... I saved approx 37% in taxes when I made the RRSP contribution, plus years of tax free growth. I only pay 20% marginal tax rate on withdrawal. You'll have to show me the math that supports your suggestion.
@@Moski369 ...saved 37% making the contribution, plus 35 years of tax free growth....paying about 22% taxes on withdrawal . It's a no-brainer.
Thanks a lot .
Very well explained!
It’s my understanding and I’ve done this but you don’t have to withhold that %, you can request an amount that’s different. I had them lower the amount of withholding tax.
I will withdraw about $400 /month to supplement my CPP Disability/CPP; helps that I have Disabled designation from CRA since my stroke in 2019
Because of the withholding tax, I assume it’s not possible to transfer assets out of a RRSP directly into a non-registered account in kind?
No, it’s not. You’ll be taxed no matter what if you pull it out.
Yes you can. A transfer in-kind is not considered a withdrawal.
@@jjlad5037 Thanks. But any transfer (in kind or in cash) is considered a withdrawal and will be taxable except under certain specific conditions.
My original question was whether it can be done in kind and I will pay the tax at the end of the year instead of the bank deducting a withholding tax at the time of transfer.
@@jjlad5037 you sure about that? How come you didn’t do it when you were melting down your RRSP?
@@K4Financial ...my broker had no issues doing transfers in kind for me. No withholding or cap gain issues at all. My RRSP is now all cash making melting down easy.
If i’m the sole breadwinner and I contribute a lump dump of money as a RRSP spousal contribution to my wife’s RRSP, who gets the refund , me or her ?
You do
@@K4Financial 👀👀👌🏻
@@radosuites7058 just remember, if funds in the spousal RSP are withdrawn within three years of the contribution the income will be taxed in the contributions name.
Thanks, Kent, for the concise explanations. One question I still have in regards to withdrawals: if I’m NOT 71 years old yet, can I contribute to my RRSP (up to my limit), say in December, and then withdraw a smaller amount from that same RRSP in the next consecutive year? I know there is a « 3 year rule » that applies to spousal contributions, hence my question…Thanks
Sure, but it won’t make sense unless you can pull it out at a lower tax rate than what you got as a refund when you put it in.
There’s certainly a case to put in a good chunk in your last working year.
If you transfer to RRIF can you take it out the same year?
Yeah. I’ll do a RRIF video right away
You can't beat them. You join them. Own the banks. If you have 50K in RRSP, invest in all six Canadian banks. You will be laughing all the way to the bank.
You should be able to leave your money in your rrsp and withdraw it as needed instead of having to withdraw it aS mandated in a rif . That seems fair to me.
and taking it out lately, your eating a 10% or so this Yr decline on return also by the looks.
You pay taxes on it as income on money you already paid taxes on. There are better ways to invest.
No you didn’t. And that’s not true. RRSPs are a great vehicle for investing and people often misunderstand their power.
Darling it's called tax deferred income on the RRSP if you invest in RRSP the govt gives you a tax credit back for the Tax bracket you are in, si in short no tax paid for the investment plus growth. When you take it out you are taxed but had the tax deferred in the first place, and gained interest..so it's a great idea to invest in RRSP
This, right here, is the problem in a nutshell. People do not understand the very simple concept of RRSPs.
@@jovicrazed Yep....some people just don't get it....they pay NO pax on the income if they invest it in an RRSP.....AND they pay NO tax on the capital gain realized inside that RRSP......it's a BLOODY GIFT....How some people call it a "tax grab" when they take it out....or pay tax on a RRIF when they die.....is ridiculous!!!
Heck, when somebody dies their RRIF could be worth a million dollars or it could be 100 bucks.....the government is taking all the risk here.....and STILL they complain????? NUTS!