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

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.