Can I take money out of my RRSP without a penalty?

You can tap your RRSP if you’re buying a home or going back to school.

1

by Rob Gerlsbeck and Sarah Efron
January 18th, 2013

Online only.

1

house_money_322Yes, if you’re using it to buy your first home or head back to school. Under the federal Home Buyers Plan, you can withdraw up to $25,000 from RRSPs without paying tax. The catch is you have to repay the full amount within 15 years. You can also withdraw $20,000 from your RRSPs tax-free to finance your education, though no more than $10,000 in one year. Once again, the money has to be repaid.

Outside of those programs, if you try to withdraw money from your RRSP you’ll usually be hit with a steep withholding tax—as much as 30% of the money you withdraw. That penalty will eventually be refunded if your income is low enough though.

One comment on “Can I take money out of my RRSP without a penalty?

  1. Why do you call it a penalty? It is not a penalty at all, it’s just taxes due on your withdrawal. You will get refunded if that amount was higher that it was supposed to be. Just as if your employer would have charged you too much taxes during the year. These things happen all the time.

    There is no penalty. Everything balances out at the end of the year.

    Reply

Leave a comment

Your email address will not be published. Required fields are marked *