RRSP Q&A: If I take out money now, what year is it reported in?

From February 16 to 19, 2010, MoneySense.ca’s top financial planners are answering your RRSP questions. For the full list of questions answered — or to submit a question of your own — click here. I went through your 21 RRSP questions on Feb/March MoneySense magazine. One question (number eight) stated that if I maxed out my 2009 RRSP contributions, any further contributions made during Jan-Feb 2010 can be declared for either tax year. So, my question is what happens with the “reverse action”? If I take money out from RRSP during Jan-Feb 2010, do I have a choice to report it as RRSP income either in 2009 or 2010 tax return? I have to raid my RRSP during this difficult times. —KDD Warren Mackenzie and Ken Hawkins: You pay tax in the year you take it out. If you take it out in 2010, you will pay tax in 2010. When you take it out there is a withholding tax as should in the table below. As an example if you withdraw $10,000, the withholding tax will be $2,000 and you will only end up with $8,000.The actual amount of tax that will eventually be paid will be determined when you file your tax return. If you have low income you may be able to recover some of the tax that was withheld. Alternatively if your income was high the amount withheld may not be enough and you will have to pay more.

*Amount of RRSP Withdrawal*	*All Provinces Except Quebec*	*Quebec*
Up to and including $5,000	10%	21%
$5,000.01 to $15,000	20%	26%
More than $15,000	30%	31%

Next question: How are Couch Potato fees different than MERs? Back to main RRSP Q&A page. Let us know what you think in the comments below.

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Stephen Thompson says:

February 17, 2021 at 10:18 pm

Can I take money out of my rrsp account now in feb 2021 and claim it for 2020 on my income tax.

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1. MoneySense Editors says:
  
  March 23, 2021 at 1:36 pm
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  
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