Withdrawing money from an RRSP before converting to a RRIF at age 71 triggers immediate withholding tax at source, plus any additional income tax owing when you file your T1 return. The withdrawal is added to your taxable income for the year — taxed at your combined federal-provincial marginal rate. The withholding tax is a prepayment, not the final amount; the actual tax depends on your total annual income.
Quick Answer
For RRSP withdrawals made in 2025, the withholding rates are: 10% on amounts up to $5,000; 20% on amounts of $5,001 to $15,000; and 30% on amounts over $15,000 (25% for Quebec residents). The withholding rate is not the final tax rate — it is a prepayment. If your marginal rate is 43%, a $20,000 withdrawal results in approximately $8,600 in actual tax, not $6,000 (30% withheld). You will owe the balance when you file your return.
RRSP Withholding Tax Rates
| Withdrawal Amount |
Withholding Rate (Non-Quebec) |
Withholding Rate (Quebec) |
| Up to $5,000 |
10% |
5% federal + Quebec rates |
| $5,001 to $15,000 |
20% |
10% federal + Quebec rates |
| Over $15,000 |
30% |
15% federal + Quebec rates |
Note: The withholding rates above are applied to each withdrawal separately — you cannot avoid a higher withholding tier by splitting one large withdrawal into multiple small ones in the same year or at the same institution. CRA requires institutions to combine multiple requests if made at the same time.
How the Final Tax Is Calculated
The RRSP withdrawal is added to your other income for the year. If you withdraw $20,000 and your employment income is $70,000, your total income is $90,000. The marginal rate on the top portion (the RRSP withdrawal) at $90,000 in Ontario is approximately 43.41% (20.5% federal + 9.15% Ontario + surtax effects). Tax on the $20,000 withdrawal = $20,000 x 43.41% = $8,682. Withholding was $6,000 (30%). Balance owing at filing = $2,682.
Strategies to Reduce RRSP Withdrawal Tax
Withdraw in low-income years: Withdrawing after retirement when employment income is zero or minimal results in the withdrawal being taxed at lower brackets — potentially just 15% federal + the lowest provincial rate.
Withdraw in the year you turn 65: RRSP income is not eligible for the pension income amount ($2,000 non-refundable federal credit) or pension income splitting. RRIF and annuity income are eligible — a reason to convert before making large withdrawals.
RRSP meltdown strategy: Systematically withdraw RRSP amounts each year up to the top of a low bracket to gradually reduce the RRSP balance before RRIF conversion age (71), paying tax at lower rates than would apply if the full balance were withdrawn at once.
Withholding and Spousal RRSPs
For spousal RRSP withdrawals, the 3-year attribution rule must be observed. If the contributing spouse made contributions in the current year or either of the two preceding calendar years, the withdrawal (up to the amount of those contributions) is attributed back to the contributing spouse and taxed in their hands — not the annuitant spouse.
Verified Against Source
RRSP withholding rates are set under subsection 153(1) of the Income Tax Act and Regulation 103. The three-tier withholding schedule has been in place since 1993. The Home Buyers’ Plan and Lifelong Learning Plan allow tax-free RRSP withdrawals subject to repayment conditions — these are not subject to withholding. Source: canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsp-related-plans/making-withdrawals.html
Edge Cases
Non-resident withholding: Non-residents of Canada who withdraw from an RRSP face a 25% withholding rate (or a reduced treaty rate depending on the country), under Part XIII of the ITA. This is a final tax, not a prepayment.
Home Buyers’ Plan (HBP): Up to $60,000 may be withdrawn from an RRSP under the HBP without withholding, provided repayment begins 2 years after the year of the withdrawal and is completed within 15 years.
Lifelong Learning Plan (LLP): Up to $10,000 per year (maximum $20,000 lifetime) may be withdrawn without withholding for full-time education, with repayment over 10 years.
Early retirement: Retirees under 65 who need income may prefer RRSP withdrawals over RRIF payments since RRIF income begins triggering minimum withdrawal requirements. However, RRIF income qualifies for the $2,000 pension income credit; RRSP withdrawals do not.
Frequently asked questions
- How much tax do I pay when I withdraw from my RRSP?
- RRSP withdrawals are taxed as employment income in the year received, at your combined federal-provincial marginal rate. The withholding rate at source is 10% (up to $5,000), 20% ($5,001-$15,000), or 30% (over $15,000) outside Quebec. This withholding is a prepayment — your actual tax is calculated at year-end based on total income and may be higher than the withholding.
Is the 30% RRSP withholding rate the final tax?
No. The 30% (or lower) withholding rate is just the amount your financial institution remits to CRA on your behalf at the time of withdrawal. Your actual tax on the withdrawal is your combined federal + provincial marginal rate at your total income for the year. At a 43% marginal rate, a $20,000 withdrawal triggers $8,600 in actual tax — but only $6,000 was withheld, leaving $2,600 owing at tax time.
Can I avoid withholding tax on RRSP withdrawals?
There is no legal way to avoid income tax on regular RRSP withdrawals — the withholding is mandatory. You can avoid withholding on Home Buyers' Plan (HBP) withdrawals (up to $60,000) and Lifelong Learning Plan (LLP) withdrawals (up to $20,000 lifetime) by designating the withdrawal under those programs. Non-residents face a flat 25% withholding that is a final tax.
What is the best time to withdraw from an RRSP?
The lowest-tax time to withdraw from an RRSP is during a year with minimal other income — typically after retirement, before starting CPP, OAS, or a workplace pension. In a zero-income year, the first $16,129 of RRSP withdrawal is effectively tax-free (covered by the Basic Personal Amount). The next $41,246 (to $57,375) is taxed at 15% federal plus the lowest provincial rate.
What is the RRSP attribution rule for spousal RRSPs?
If the contributing spouse made contributions to a spousal RRSP in the year of withdrawal or in either of the two preceding calendar years, the withdrawal (up to the amount of recent contributions) is attributed back to the contributor and taxed in their hands. Wait 3 full calendar years after the last contribution before the annuitant spouse can withdraw without attribution.
Does RRSP income qualify for the pension income credit?
No. RRSP withdrawals do not qualify for the $2,000 federal pension income credit (line 31400 of the T1) or pension income splitting. Only RRIF income (after age 65), annuity income, and defined benefit pension income qualify. This is a reason to convert an RRSP to a RRIF before making large withdrawals if you are 65 or older.
What is an RRSP meltdown strategy?
An RRSP meltdown involves making annual RRSP withdrawals in retirement to gradually draw down the balance at low tax rates, rather than letting it grow to a large amount that must be withdrawn from a RRIF or estate at high rates. The strategy works best when annual withdrawals are kept below the threshold where OAS clawback or high provincial surtaxes apply.
How does an RRSP withdrawal affect OAS?
RRSP withdrawals increase your net income (line 23600), which is used to calculate the OAS recovery tax (clawback). In 2025, OAS is clawed back at 15% of net income above $90,997. A large RRSP withdrawal can partially or fully eliminate OAS for that year. Planning withdrawals to stay below the clawback threshold is a common retirement income strategy.
Can I split RRSP withdrawals with my spouse?
No. RRSP withdrawals cannot be split with a spouse for tax purposes (unlike RRIF income after age 65 or defined benefit pension income). Contributing to a spousal RRSP while working allows the lower-income spouse to withdraw in retirement — but the attribution rule applies if the wait period is not observed.
What happens to an RRSP when the owner dies?
An RRSP is deemed to be fully withdrawn at the date of death and included in the deceased's income for that year — potentially triggering the highest marginal rate on the entire balance. Exceptions: the balance can be rolled tax-free to a surviving spouse's RRSP or RRIF, or to a financially dependent child or grandchild's RRSP or RDSP in certain circumstances.
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Frequently asked questions
- How much tax do I pay when I withdraw from my RRSP?
- RRSP withdrawals are taxed as employment income in the year received, at your combined federal-provincial marginal rate. The withholding rate at source is 10% (up to $5,000), 20% ($5,001-$15,000), or 30% (over $15,000) outside Quebec. This withholding is a prepayment — your actual tax is calculated at year-end based on total income and may be higher than the withholding.
- Is the 30% RRSP withholding rate the final tax?
- No. The 30% (or lower) withholding rate is just the amount your financial institution remits to CRA on your behalf at the time of withdrawal. Your actual tax on the withdrawal is your combined federal + provincial marginal rate at your total income for the year. At a 43% marginal rate, a $20,000 withdrawal triggers $8,600 in actual tax — but only $6,000 was withheld, leaving $2,600 owing at tax time.
- Can I avoid withholding tax on RRSP withdrawals?
- There is no legal way to avoid income tax on regular RRSP withdrawals — the withholding is mandatory. You can avoid withholding on Home Buyers' Plan (HBP) withdrawals (up to $60,000) and Lifelong Learning Plan (LLP) withdrawals (up to $20,000 lifetime) by designating the withdrawal under those programs. Non-residents face a flat 25% withholding that is a final tax.
- What is the best time to withdraw from an RRSP?
- The lowest-tax time to withdraw from an RRSP is during a year with minimal other income — typically after retirement, before starting CPP, OAS, or a workplace pension. In a zero-income year, the first $16,129 of RRSP withdrawal is effectively tax-free (covered by the Basic Personal Amount). The next $41,246 (to $57,375) is taxed at 15% federal plus the lowest provincial rate.
- What is the RRSP attribution rule for spousal RRSPs?
- If the contributing spouse made contributions to a spousal RRSP in the year of withdrawal or in either of the two preceding calendar years, the withdrawal (up to the amount of recent contributions) is attributed back to the contributor and taxed in their hands. Wait 3 full calendar years after the last contribution before the annuitant spouse can withdraw without attribution.
- Does RRSP income qualify for the pension income credit?
- No. RRSP withdrawals do not qualify for the $2,000 federal pension income credit (line 31400 of the T1) or pension income splitting. Only RRIF income (after age 65), annuity income, and defined benefit pension income qualify. This is a reason to convert an RRSP to a RRIF before making large withdrawals if you are 65 or older.
- What is an RRSP meltdown strategy?
- An RRSP meltdown involves making annual RRSP withdrawals in retirement to gradually draw down the balance at low tax rates, rather than letting it grow to a large amount that must be withdrawn from a RRIF or estate at high rates. The strategy works best when annual withdrawals are kept below the threshold where OAS clawback or high provincial surtaxes apply.
- How does an RRSP withdrawal affect OAS?
- RRSP withdrawals increase your net income (line 23600), which is used to calculate the OAS recovery tax (clawback). In 2025, OAS is clawed back at 15% of net income above $90,997. A large RRSP withdrawal can partially or fully eliminate OAS for that year. Planning withdrawals to stay below the clawback threshold is a common retirement income strategy.
- Can I split RRSP withdrawals with my spouse?
- No. RRSP withdrawals cannot be split with a spouse for tax purposes (unlike RRIF income after age 65 or defined benefit pension income). Contributing to a spousal RRSP while working allows the lower-income spouse to withdraw in retirement — but the attribution rule applies if the wait period is not observed.
- What happens to an RRSP when the owner dies?
- An RRSP is deemed to be fully withdrawn at the date of death and included in the deceased's income for that year — potentially triggering the highest marginal rate on the entire balance. Exceptions: the balance can be rolled tax-free to a surviving spouse's RRSP or RRIF, or to a financially dependent child or grandchild's RRSP or RDSP in certain circumstances.