To withdraw money from your RRSP, you submit a request to the financial institution that holds the account, either online, at a branch, or by mailing a completed form. The institution withholds federal tax before releasing the funds, adds the gross amount to your taxable income for the year, and permanently removes the contribution room you used to make the original deposit. Two federal programs, the Home Buyers’ Plan and the Lifelong Learning Plan, let you take money out without immediate tax if you follow strict repayment rules.
How to Submit the Request
For a standard withdrawal you need your Social Insurance Number, the RRSP account number, and the dollar amount. Your institution provides an internal authorization form that confirms you understand the withholding and specifies where the net proceeds should land: a chequing account, savings account, or non-registered investment account.
Online requests are the fastest. Some banks process same-day or next-day into a linked account. Branch and mail submissions usually run three to five business days, and complex requests take longer.
You can also do an in-kind withdrawal, where investments like stocks or mutual fund units transfer directly to a non-registered account without being sold. The fair market value on the transfer date is what counts for tax. This avoids forced selling in a down market, but you still owe tax on the value transferred and still lose the contribution room.
By the end of February the following year, your institution issues a T4RSP slip showing the total withdrawn and the tax withheld.1Canada.ca. Filing the T4RSP and T4RIF Information Returns You need it to file your return for the year the withdrawal occurred.
What the Institution Withholds
Withholding is applied at the moment of withdrawal and sent directly to the CRA as a tax prepayment. The rate depends on how much you take in a single transaction:2Canada.ca. Tax Rates on Withdrawals
- Up to $5,000: 10% withheld
- $5,001 to $15,000: 20% withheld
- Over $15,000: 30% withheld
Residents of Quebec pay lower federal withholding of 5%, 10%, or 15% at those same tiers, and Revenu Québec takes a separate provincial cut on top.2Canada.ca. Tax Rates on Withdrawals
Because the rate is per transaction, splitting a $20,000 withdrawal into four $5,000 requests triggers 10% each rather than 30% on a single lump sum. It’s legal, and some people use it to keep more cash upfront. Your total tax bill at year-end stays the same.
If you’ve left Canada and are no longer a resident, RRSP withdrawals are subject to a flat 25% withholding under Part XIII of the Income Tax Act, potentially reduced by a tax treaty.3Canada.ca. Non-Residents of Canada For non-residents, that withholding is generally the final Canadian tax on the withdrawal.
What You Actually Owe at Tax Time
The full amount you withdrew, including the portion the institution already sent to the CRA, is added to your income for the calendar year.4Justice Canada. Income Tax Act RSC 1985 c 1 (5th Supp.) – Section 146 It stacks on top of your employment income, investment income, and everything else. If that pushes you into a bracket higher than the withholding rate covered, you owe the difference when you file. If the withholding exceeded your actual rate, you get the surplus back.
A $20,000 withdrawal with 30% withheld leaves $14,000 in your pocket. If your marginal rate is 40%, you still owe another $2,000 at tax time. The withholding is a down payment, not a settlement.
Impact on OAS and GIS
For retirees and near-retirees, RRSP withdrawals can trigger the Old Age Security recovery tax. For the July 2026 to June 2027 payment period, the OAS clawback begins once net income exceeds $93,454, and every dollar above that threshold reduces OAS by 15 cents. Seniors aged 65 to 74 lose OAS entirely once net income exceeds roughly $152,000, and those 75 and over lose it above approximately $158,000.5Canada.ca. Old Age Security Pension Recovery Tax A large withdrawal in the wrong year can cost a full year of OAS. The Guaranteed Income Supplement is income-tested the same way and can be reduced or eliminated by RRSP withdrawal income.
The Contribution Room You Won’t Get Back
This is the most misunderstood consequence of an RRSP withdrawal. Unlike a Tax-Free Savings Account, where withdrawn amounts get added back to your contribution room the following January, RRSP room does not come back.6Canada.ca. Withdrawing From a TFSA If you contributed $30,000 over several years and then withdraw it, those $30,000 of room are gone. You cannot re-contribute that amount later without it counting against new room from future earned income.
The only exceptions are HBP and LLP repayments, which are structured as loans back to yourself. Those repayments don’t generate a new tax deduction; they restore the balance inside the account without creating over-contribution problems.7Canada.ca. How Contributions Affect Your RRSP Deduction Limit
Home Buyers’ Plan
The Home Buyers’ Plan lets you withdraw up to $60,000 from your RRSPs to buy or build a qualifying home without withholding tax and without adding the amount to your income for that year.8Canada.ca. The Home Buyers’ Plan You generally must be considered a first-time buyer, meaning neither you nor your spouse or common-law partner owned and lived in a home as your principal residence during the four calendar years before the withdrawal. If you’re buying with a partner who also qualifies, each of you can withdraw up to $60,000 from your own RRSP.
You fill out Form T1036 and give it to your RRSP issuer, who releases the funds without withholding tax.9Canada.ca. T1036 Home Buyers’ Plan (HBP) – Request to Withdraw Funds From an RRSP Be truthful on the form. Falsely claiming you intend to use the property as a principal residence carries penalties and makes the entire withdrawal taxable.10Canada.ca. The Home Buyers’ Plan (HBP) – Understanding Eligibility and Withdrawals
You have 15 years to repay the full amount back into your RRSPs. When repayments start depends on the year of your first withdrawal:11Canada.ca. How to Repay the Amounts Withdrawn From Your RRSPs Under the Home Buyers’ Plan
- First withdrawal before 2022: repayments began the second year after the withdrawal year.
- First withdrawal between January 1, 2022 and December 31, 2025: a temporary relief measure pushes the start to the fifth year after the withdrawal year. A 2023 withdrawal means the first repayment year is 2028.
- First withdrawal in 2026 or later: repayments start the second year after the withdrawal year.
The CRA tells you your minimum repayment each year on your Notice of Assessment. If you pay less than required, the shortfall gets added to your taxable income for that year. There’s no penalty beyond that, but every skipped dollar effectively converts a tax-free withdrawal into a taxable one.
Lifelong Learning Plan
The Lifelong Learning Plan works on similar principles but funds education. You can withdraw up to $10,000 per year, with a lifetime cap of $20,000, to pay for full-time training or post-secondary study for yourself or your spouse.12Canada.ca. Lifelong Learning Plan Withdrawals You cannot use the LLP to fund your child’s education. Submit Form RC96 to your RRSP issuer for each withdrawal.13Canada.ca. RC96 Lifelong Learning Plan (LLP) Request to Withdraw Funds From an RRSP
Repayment stretches over 10 years and can start as early as the second year or as late as the fifth year after your first withdrawal, depending on when the student finishes or leaves the program.14Canada.ca. Definitions for Lifelong Learning Plan Any missed annual repayment becomes taxable income for that year.15Canada.ca. Lifelong Learning Plan
Errors on either T1036 or RC96 can cause a withdrawal to be treated as a standard taxable one with full withholding, so double-check the forms before you submit. Keep copies. You may need them years later during the repayment period or if the CRA questions your eligibility.
Spousal RRSPs and the Three-Year Rule
If your spouse or common-law partner contributed to an RRSP in your name, an attribution rule can shift the tax back to the contributor. When the annuitant withdraws money, that withdrawal is taxed in the contributor’s hands if the contributor made any contributions to any of the annuitant’s spousal RRSPs in the year of withdrawal or the two preceding calendar years.16Canada.ca. Withdrawing From Spousal or Common-Law Partner RRSPs
You need a three-year gap with zero spousal contributions before the annuitant can withdraw and have the income taxed at their own rate. Withdrawing too soon defeats the income-splitting point of a spousal RRSP and can raise the household’s overall tax bill. The attribution rule doesn’t apply if the couple has separated because of a relationship breakdown, or if either spouse has died or become a non-resident.17Canada.ca. ARCHIVED – Spousal or Common-Law Partner Registered Retirement Savings Plans
Locked-In Accounts Follow Different Rules
If the money in your account originally came from a pension plan, through a job change or plan wind-up, it may be sitting in a Locked-In Retirement Account rather than a standard RRSP. LIRAs look similar on statements, but the withdrawal rules differ. Funds are locked until you reach at least age 55 (the exact age depends on your province’s pension legislation), and even then, your province sets limits on how much you can take out. You can’t use LIRA funds for the Home Buyers’ Plan. Early access is available only in narrow circumstances such as severe financial hardship, significantly shortened life expectancy, permanently leaving Canada, or a very small account balance. If you’re unsure whether your account is locked in, ask your financial institution before submitting a request.
The Age 71 Deadline
You cannot hold an RRSP indefinitely. By December 31 of the year you turn 71, you must do one of three things with whatever remains:18Canada.ca. Options for Your Own RRSPs
- Convert to a Registered Retirement Income Fund, which requires minimum annual withdrawals based on your age while the remaining balance keeps growing tax-sheltered.
- Purchase an annuity that pays you a fixed income stream, either for life or for a set number of years.
- Withdraw the full balance, pay withholding at the time, and report the entire amount as income on that year’s return.
If you have an outstanding HBP or LLP balance when the RRSP matures, the CRA has specific rules for handling the remaining repayments; check your Notice of Assessment for the details.19Canada.ca. RRSP Options When You Turn 71 Missing the December 31 deadline can cause the entire RRSP balance to be deregistered and taxed in a single year, which is one of the most expensive mistakes in Canadian retirement planning.