Can I close my RRSP at any time? - Investing Questions (2024)

FAQs

Can I close my RRSP at any time? - Investing Questions? ›

You can close your Registered Retirement Savings Plans (RRSP) and take cash (as long as the investments are liquid) before you retire.

You can make a withdrawal from your RRSP any time¹ as long as your funds are not in a locked-in plan. The withdrawal, however, is subject to withholding tax and the amount also needs to be included as income when filing your taxes. There are situations in which tax-deferred withdrawals can be made from your RRSP.

You can withdraw unused contributions you made to an RRSP based on an approved Form T3012A, Tax Deduction Waiver on the Refund of Your Unused RRSP, PRPP, or SPP Contributions from your RRSP, PRPP or SPP. If you transferred the unused contributions to your RRIF, see Withdrawing the unused RRSP contributions.

There is no minimum age for opening an RRSP, but in the year you turn 71, you must stop making contributions and convert the account into either an annuity or a so-called Registered Retirement Income Fund (RRIF), which requires that you make minimum withdrawals every year.

In Canada, the current withholding tax rates for withdrawing funds from an RRSP are as follows: 10% on amounts up-to $5,000; 20% on amounts over $5,000 up-to and including $15,000; and. 30% on amounts over $15,000.

Like other registered savings plans, RRSPs can hold savings deposits and investments. Qualified investments – allowed to be held in an RRSP – include cash, gold, GICs, bonds, mutual funds, ETFs, and more.

By the end of the year you turn age 71, you must convert your RRSP to income options or withdraw all your RRSP funds.

You can withdraw from your RRSP at any time and for any reason without penalty. RRSP withdrawals are considered taxable income, and your financial institution automatically withholds taxes when you take money out of your RRSP.

If you hold assets in a registered account (like an RRSP or RRIF for example) and wish to withdraw the funds or move them into a non-registered account, you can request to deregister the account.

What are the disadvantages of RRSP withdrawal? ›

Where do you deduct your contributions. Deduct your contributions on line 20800 – RRSP deduction of your income tax and benefit return. For information on deducting your pooled registered pension plan (PRPP) contributions, go to contributions to a PRPP.

It does not matter if the earnings are in the form of interest, dividends or capital gains, since all amounts withdrawn from an RRSP are taxed at rates for ordinary income. With corporately-held investments, the after-tax amount that remains depends on the type of income that is earned.

Ineligible RRSP Investments:

Business investments in small business. Commodity futures. Investments/stocks within a private company in which you are a designated shareholder. Personal assets (jewelry/art)

A RRSP can be converted to a RRIF at any age. If we look at the RRIF minimum withdrawal tables, we have a series of withdrawal rates that increase with age. In the year a RRIF owner turns 60, their minimum withdrawal is 3.23% of the account value at the end of the previous year. At 65, the rate is 3.85%.

To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You must also provide a signed agreement to buy or build a qualifying home. The best part is the withdrawal is not taxable as long as you repay it within a 15-year period.

Generally, you can contribute to your RRSP, PRPP, or SPP: until December 31st of the year you turn 71 years of age. when you have an available RRSP deduction limit.