Cash withdrawals

Cashing out your RRSP

While you can withdraw all or part of your RRSP, it’s not the best option for most people. The full amount of the withdrawal is subject to witholding tax, and must be reported as taxable income when you file your tax return.

Convert to RRIF, before cashing out RRSPs?

If you are at least age 65, consider converting your RRSP to a RRIF before withdrawing from it. That way, your withdrawal is at least eligible for the Pension Income Credit and Pension Income Splitting, to potentially save you income tax.

Deemed cash out of RRSPs

Remember the RRSP conversion deadline: you cannot hold an RRSP after December 31st of the year you turn 71. Forgetting to convert your RRSP will mean it is treated as withdrawn like cash on January 1 the following year. That makes it fully taxable as income, and you permanently lose the opportunity to shelter it from tax within your RRSP or RRIF.