Are RRSP withdrawals taxed in Canada?

Yes. RRSP withdrawals are added to your taxable income and taxed at your marginal rate. A withholding tax is also deducted at source: 10% on amounts up to $5,000, 20% on $5,001-$15,000, and 30% on amounts over $15,000.

Can I withdraw from my RRSP before retirement?

Yes, you can withdraw anytime, but early withdrawals are taxed as income and you permanently lose that contribution room. The exceptions are the Home Buyers Plan (HBP) and Lifelong Learning Plan (LLP), which allow tax-free withdrawals that must be repaid.

What is the RRSP withholding tax rate?

The withholding tax is not a separate tax — it is a prepayment of income tax. Rates are: 10% on withdrawals up to $5,000, 20% on $5,001 to $15,000, and 30% on amounts over $15,000 (higher in Quebec). Your actual tax depends on your total income.

Do I get my RRSP contribution room back after withdrawing?

No. Unlike the TFSA, RRSP contribution room is permanently lost when you withdraw. The only exception is HBP and LLP withdrawals, where room is restored as you repay the amounts.

What happens to my RRSP when I turn 71?

You must convert your RRSP to a RRIF, purchase an annuity, or withdraw the full balance by December 31 of the year you turn 71. You cannot contribute to your own RRSP after this date.

RRSP Withdrawal Rules Canada | Taxes, Withholding & Penalties

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.

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

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Annual minimum repayment	1/15 of total withdrawn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.

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

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

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