RRSP Withdrawal Rules
RRSP withdrawals are fully taxable as income — both your original contributions and investment growth. Unlike TFSAs, you also permanently lose that contribution room. For a precise estimate of the tax impact before withdrawing, use the RRSP withdrawal tax calculator.
Withholding tax rates
When you withdraw from your RRSP, your financial institution deducts withholding tax at source:
| Withdrawal Amount | Withholding Tax Rate |
|---|---|
| Up to $5,000 | 10% |
| $5,001 to $15,000 | 20% |
| Over $15,000 | 30% |
Quebec residents: add 16% provincial withholding
Important: Withholding tax is not your final tax bill. Withdrawals are added to your income and taxed at your marginal rate. You may owe more (or get a refund) when you file your return.
Example: $20,000 withdrawal
| Amount | |
|---|---|
| Withdrawal | $20,000 |
| Withholding tax (30%) | -$6,000 |
| Cash received | $14,000 |
| Actual tax owed (30% bracket) | $6,000 |
| Tax owing/refund | $0 |
If your marginal rate is 40%, you’d owe another $2,000 at tax time.
Tax-free withdrawal options
If you are comparing home-purchase withdrawals across account types, the FHSA withdrawal rules page is the natural companion.
Home Buyers’ Plan (HBP)
| Feature | Details |
|---|---|
| Maximum withdrawal | $60,000 |
| Purpose | First-time home purchase |
| Repayment period | 15 years |
| Annual minimum repayment | 1/15 of total withdrawn |
If you don’t repay the minimum each year, that amount is added to your taxable income. See the full HBP withdrawal guide if you are using RRSP funds for a home purchase.
Lifelong Learning Plan (LLP)
| Feature | Details |
|---|---|
| Maximum withdrawal | $10,000/year, $20,000 total |
| Purpose | Full-time education |
| Repayment period | 10 years |
| Annual minimum repayment | 1/10 of total withdrawn |
RRSP vs RRIF withdrawals
| Feature | RRSP | RRIF |
|---|---|---|
| Minimum withdrawal | None | Yes, starting at 5.28% (age 72) |
| Maximum withdrawal | None | None |
| Withholding tax | Yes | Only on amounts above minimum |
| Conversion deadline | December 31 of year you turn 71 | N/A |
If you are approaching conversion age, review the RRSP to RRIF conversion guide before making large withdrawals.
For the withdrawal stage after conversion, see RRIF withdrawal rules Canada.
RRIF minimum withdrawal rates (selected ages)
| Age | Minimum Withdrawal % |
|---|---|
| 72 | 5.28% |
| 75 | 5.82% |
| 80 | 6.82% |
| 85 | 8.51% |
| 90 | 11.92% |
| 95+ | 20.00% |
When RRSP withdrawals make sense
- Income is very low — Withdraw when in a low tax bracket (e.g., between jobs)
- Before age 65 — Bridge income before CPP/OAS
- Pension income splitting unavailable — If under 65, RRSP income can’t be split
- Estate planning — Draw down RRSP before death to reduce final tax bill
Those situations are easiest to judge within a full retirement income strategy in Canada.
Use the RRSP withdrawal tax calculator before withdrawing to estimate your net proceeds.
When to avoid RRSP withdrawals
- High income year — Withdrawals push you into higher brackets
- Before TFSA is maxed — Lose room permanently vs. TFSA
- Near retirement — Wait for lower-income years
- Receiving GIS — RRSP income reduces GIS benefits
If you are still making the high-level account choice rather than the withdrawal decision, read TFSA vs RRSP for beginners.
RRSP meltdown: strategic withdrawals before retirement
For Canadians with large RRSPs and relatively low income in their late 50s or early 60s, withdrawing RRSP funds before CPP and OAS begin can result in significantly less total tax paid over a lifetime. The strategy:
- Retire or semi-retire between ages 55–65, when employment income drops
- Withdraw $20,000–$50,000/year from RRSP while in a lower tax bracket (20–30%)
- Re-contribute to TFSA — the after-tax proceeds are re-sheltered in a TFSA where they grow and are withdrawn tax-free
- Defer CPP and OAS — delaying CPP to 70 increases payments by 42% vs. starting at 65
This approach avoids a situation where CPP + OAS + RRIF mandatory withdrawals stack on top of each other in your late 70s, pushing you into the 40%+ tax bracket or triggering OAS clawback. For the full strategy, see RRSP meltdown strategy.
| Strategy | Annual tax rate on RRSP | Total tax on $400K RRSP |
|---|---|---|
| Withdraw everything at 70+ (high income) | 40–50% | $160K–$200K |
| Gradual RRSP meltdown from age 58 | 20–28% | $80K–$112K |
| Difference | — | $48K–$88K savings |
RRSP withdrawals and GIS
For lower-income retirees who qualify for the Guaranteed Income Supplement (GIS), RRSP and RRIF withdrawals can reduce or eliminate GIS payments. GIS is reduced by $1 for every $2 of RRSP/RRIF income above the income threshold.
This is a powerful argument for either:
- Aggressively drawing down RRSP before GIS becomes relevant (typically ages 65+)
- Rebuilding TFSA with after-tax RRSP withdrawals, since TFSA withdrawals do not count toward the GIS income test
If GIS eligibility is expected in retirement, consult GIS payment amounts and income thresholds before deciding on RRSP withdrawal timing.