RRSP Withdrawal Rules: A Registered Retirement Savings Plan (RRSP) is mainly made for retirement savings, but you can take money out before retirement if you need it. There is no general rule that says you must wait until a certain age to make a withdrawal from an unlocked RRSP.
But taking money out usually has a tax cost. The amount you withdraw is generally added to your income for that year. Your financial institution will normally keep some tax before giving you the money. There are also two important programs that let eligible people take money from an RRSP without the usual tax at the time of withdrawal. These are the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).
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How Regular RRSP Withdrawals Work
For a normal RRSP withdrawal, you can take out money at any time if the RRSP isn’t locked-in. Locked-in RRSPs generally have much stricter rules and may not allow regular withdrawals.
The amount you receive is usually taxable in the year you take it out. The bank or other RRSP provider will issue a T4RSP slip, and you must report the withdrawal as income on your tax return. The tax already deducted can then be claimed on your return.
RRSP Withdrawal Tax Rates
| Amount withdrawn | Tax withheld |
|---|---|
| Up to $5,000 | 10% |
| More than $5,000 up to $15,000 | 20% |
| More than $15,000 | 30% |
Quebec has lower federal withholding rates of 5%, 10% and 15%, with provincial tax also being withheld. For non-residents of Canada, the normal withholding rate is 25%, unless a tax treaty provides for a lower rate.
Important Points before a Regular Withdrawal
- You can generally withdraw money from an unlocked RRSP before retirement.
- The withdrawal is normally added to your taxable income.
- Tax is usually deducted before you receive the money.
- You don’t get the RRSP contribution room back after making a normal withdrawal.
- A direct transfer from one RRSP to another RRSP is generally treated as a transfer, not a withdrawal, so it can remain tax-deferred.
RRSP Withdrawals for a Home or Education
Home Buyers’ Plan
The Home Buyers’ Plan allows eligible people to use money from their RRSP to buy or build a qualifying home. The current HBP withdrawal limit is $60,000. You can also use an FHSA for the same qualifying home if you meet the rules for both accounts.
You need to complete Form T1036 when making an HBP withdrawal. You can make more than one HBP withdrawal, but the withdrawals generally need to be made in the same calendar year as the first withdrawal or in January of the following year.
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The money taken through the HBP isn’t normally included in your income at the time of withdrawal. But you have to repay the amount to your RRSP, PRPP or SPP over time. The repayment period can be up to 15 years.
For people making their first HBP withdrawal between January 1, 2026 and December 31, 2028, the government has extended temporary repayment relief. Their 15-year repayment period starts in the fifth year after the year of the first withdrawal. For example, a first withdrawal made in 2026 has a first repayment year of 2031.
One more thing is worth knowing. RRSP contributions made during the 89-day period before an HBP withdrawal can have special deduction limits.
Lifelong Learning Plan
The Lifelong Learning Plan lets eligible people withdraw RRSP money to finance full-time education or training for themselves or their spouse or common-law partner.
Under the LLP, you can withdraw up to $10,000 in a calendar year and up to $20,000 for one participation period. These amounts aren’t normally included in income when the withdrawal is made.
LLP withdrawals generally have to be repaid over 10 years. If an amount that was due isn’t repaid, that amount is normally added to taxable income for that year.
The LLP also has conditions about the student’s enrolment. For example, a student generally needs to receive a written offer to enrol before March of the year after the withdrawal.
What Happens to Your RRSP at Age 71?
You can’t keep your own RRSP open in the same way forever. By the end of the year you turn 71, your RRSP has to mature. You can withdraw the money, transfer it to a Registered Retirement Income Fund (RRIF), or use it to buy an eligible annuity.
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A direct transfer to a RRIF doesn’t normally have tax withheld at the time of the transfer. But payments you later receive from the RRIF are generally taxable income. The December 31 deadline in the year you turn 71 is also important because you can’t keep contributing to your own RRSP after that year.
RRSP Withdrawal Rules Summery
| Situation | Tax at withdrawal | Main rule |
|---|---|---|
| Regular RRSP withdrawal | Generally taxable | Amount is added to income |
| HBP withdrawal | No normal withholding tax | Up to $60,000 and must be repaid |
| LLP withdrawal | No normal withholding tax | Up to $10,000 per year and $20,000 per participation |
| Direct RRSP-to-RRSP transfer | Generally not taxable | Must be transferred directly |
| RRSP converted to RRIF | No tax on direct transfer | Future RRIF payments are generally taxable |
FAQs About RRSP Withdrawals
1. Can I withdraw money from my RRSP before age 71?
Yes. There is no general minimum age for taking money from an unlocked RRSP. But a regular withdrawal is normally taxable.
2. Is RRSP withdrawal always taxed?
A regular withdrawal is generally taxable. HBP and LLP withdrawals are special exceptions when all their conditions are met.
3. Does RRSP withdrawal tax mean I won’t have to pay anything later?
Not always. The tax withheld by your financial institution is only a withholding amount. Your final tax bill depends on your income and tax bracket.
4. What happens if I don’t repay HBP or LLP amounts on time?
The required unpaid amount can become taxable income for the year in which it was due.
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