Tax-efficient RRSP withdrawal tips

Tax-efficient ways to withdraw from your RRSP

Take out as little as you can to extend tax deferral


A: Last year, in my mid-50s, I was diagnosed with a serious ailment, which forced me to quit my job and start collecting long-term disability. Since I don’t have taxable income for this year, and most of my assets are in my RRSP, what would be the most tax-efficient way for me to withdraw money from my RRSP savings?

—R.J., Mississauga, Ont.

Q: Take out as little as you can, to extend the tax deferral as long as you can, says Dean Paley, Burlington, Ont.-based CPA. “If you are single, then you might want to withdraw $11,327—the basic personal tax amount.” You would have no tax payable at the end of the year. If you are married, this strategy doesn’t work because your spouse would have claimed the credit and drawing out from the RRSP means no tax is saved in the transaction. If this is the case, defer taking funds from the registered plans as long as possible. In looking at your retirement, you should also consider what you’ll get from CPP and OAS. You should also consider whether you may be able to re-enter the workforce down the road. All that said I recognize that your income needs may make it difficult to hold off on drawing from you RRSP. Best of luck to you on your health.

Bruce Sellery is a frequent guest on Cityline, and also writes for Today’s Parent and Chatelaine. Do you have your own personal finance question? Write to us at [email protected]