Withdrawing RRSP contributions


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desi in ottawa   
Member since: May 04
Posts: 1627
Location:

Post ID: #PID Posted on: 01-12-04 14:29:21

Can teh contributions from the RRSP be withdrawn? I know it will be taxed upto 10% for less than $5k. What if it is more than $5k and less than $10k. If I move out of Canada and close my RRSP, how much tax (%) I will end up paying for less than $10k? Can I take it out in two withdraws, say $4.5k each time? I thought I would pay 10% tax if I withdraw like that. Am I right or wrong?



dfwrp   
Member since: Feb 04
Posts: 434
Location: GTA

Post ID: #PID Posted on: 01-12-04 15:28:58

As far as I know, whatever you withdraw from RRSP is considered as your income and will be taxed.

If you reach a higher income bracket because of the RRSP withdrawl the tax rate may be higher.


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YoursTruly   
Member since: Jul 04
Posts: 274
Location: Brampton

Post ID: #PID Posted on: 01-12-04 15:29:49

Hi DiO,

Recently I submitted an article "RRSP-FAQs" to canadiandesi.ca for uploading. You may find brief answers to your questions in the article.

Here is a detailed reply to your questions:

Q. Can the contributions from the RRSP be withdrawn?

A. Yes. You can withdraw money from your individual RRSP anytime but not from your locked-in accounts.

The RRSP trustee is required to withhold 10 to 30% of the withdrawn amount for non-Quebec residents.

$1-$5,000 -------------10%
$5,001-$15,000-------20%
Greater than 15,001--30%

The cash withdrawn is then added to your income for the year and taxed at your marginal tax rate. Depending on your marginal tax rate, you may or may not pay tax in addition to the withheld amount.

You can certainly withdraw more than once from your RRSP, but be mindful that some institutions charge redemption fee or service fee every time you tap your RRSP account.

Q. If I move out of Canada and close my RRSP, how much tax (%) I will end up paying for less than $10k?

A. This question has two parts:

(1) If you close RRSP and then move out of Canada

You will be taxed at your marginal tax rate.

(2) If you move out of Canada and become a non-resident and then close your RRSP account

The rules are quite complex but in simple words the answer is: There would be a non-resident withholding tax of up to 25% depending on your new country of residence.


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desi in ottawa   
Member since: May 04
Posts: 1627
Location:

Post ID: #PID Posted on: 01-12-04 15:53:56

YoursTruly,

Thx for the detailed info. Much appreciated. Where can I find those FAQs on CD?

DIO



YoursTruly   
Member since: Jul 04
Posts: 274
Location: Brampton

Post ID: #PID Posted on: 01-12-04 16:45:10

Quote:
Orginally posted by desi in ottawa

YoursTruly,

Thx for the detailed info. Much appreciated. Where can I find those FAQs on CD?

DIO



The article was sent to GG and it is yet to be uploaded.


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Man's Best Friend :H




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