Can I contribute and withdraw my RRSP in the same year

Yes, you can withdraw same year without penalty. That's usually how people do it when they take out RRSP loans.

How can you use it to withdraw against "another investment"? It won't be your first time as a home buyer anymore if you are buying another property.

Withdrawals typically cost $50 per, so I'm not sure how you will net profit from a lower withholding rate, especially when it's just withholding, you will still end up paying the same in the end, but you will still need to pay the multiple withdrawal fees.

Jon Lai wrote: ↑ Yes, you can withdraw same year without penalty. That's usually how people do it when they take out RRSP loans.

How can you use it to withdraw against "another investment"? It won't be your first time as a home buyer anymore if you are buying another property.

Withdrawals typically cost $50 per, so I'm not sure how you will net profit from a lower withholding rate, especially when it's just withholding, you will still end up paying the same in the end, but you will still need to pay the multiple withdrawal fees.

Thank you!

No, I am not buying another property. I want to use the fund for something else

For the withholding, let say I want to withdraw 30k then the withholding will be 9K. if I do 2 times * 15k, then the withholding will be 6k only. I can use that 3K in the present, rather than waiting for the tax return

llttpp wrote: ↑ Thank you!

No, I am not buying another property. I want to use the fund for something else

For the withholding, let say I want to withdraw 30k then the withholding will be 9K. if I do 2 times * 15k, then the withholding will be 6k only. I can use that 3K in the present, rather than waiting for the tax return

Remember you probably have to pay more when it comes to tax time and not getting it more, and should be more than 6K even, unless you have room to contribute the same amount you withdraw back in again

mkl38s wrote: ↑ Remember you probably have to pay more when it comes to tax time and not getting it more, and should be more than 6K even, unless you have room to contribute the same amount you withdraw back in again

Should I be paying the same?

For example:

I make 60K in 2021, I contributed 30K but then I withdraw 30K in 2021 again.

So in the tax return, I need to file 60K as my annual income, 30K in the RRSP contribution and either 6k or 9K in the withholding section

Since I already paid income tax per paycheque (on the 60K income originally), then should the withholding amount be returned to me?

llttpp wrote: ↑ Should I be paying the same?

For example:

I make 60K in 2021, I contributed 30K but then I withdraw 30K in 2021 again.

So in the tax return, I need to file 60K as my annual income, 30K in the RRSP contribution and either 6k or 9K in the withholding section

Since I already paid income tax per paycheque (on the 60K income originally), then should the withholding amount be returned to me?

Well, 30K is on top of 60K (ie you make 90K by year end). I don’t think 6K tax on the 30K is enough, that is only 20%. I don’t have the exact number, you can plug into a tax program and see. You may have to buy some RRSP to avoid paying more tax

mkl38s wrote: ↑ Well, 30K is on top of 60K (ie you make 90K by year end). I don’t think 6K tax on the 30K is enough, that is only 20%. I don’t have the exact number, you can plug into a tax program and see. You may have to buy some RRSP to avoid paying more tax

Oh I see. Thank you!!

llttpp wrote: ↑ Thank you!

No, I am not buying another property. I want to use the fund for something else

For the withholding, let say I want to withdraw 30k then the withholding will be 9K. if I do 2 times * 15k, then the withholding will be 6k only. I can use that 3K in the present, rather than waiting for the tax return

You must remember that the withholding tax from an RRSP withdrawal will just reduce the amount that you immediately get from the financial institution. Breaking up the RRSP withdrawal into lower amounts because of the tier withholding tax rate, It won't affect how much tax you wind up paying to the government when you file in April 30. Breaking the amount into smaller amounts to have less withholding tax deducted by the financial institution will probably mean owing the government money on April 30.

It is similar to withholding tax on a pay. Your employer is required to deduct a set amount from the employee's pay. Under certain conditions, an employee can ask for this set amount to be reduced and the employee can ask for a higher amount to be withheld (without any conditions). By lowering the amount, the employee could just see him/herself owing a larger amount on April 30 to the government than if he/she would have if he/she didn't request to have the withheld amount reduced on his/her pay.

llttpp wrote: ↑ Should I be paying the same?

For example:

I make 60K in 2021, I contributed 30K but then I withdraw 30K in 2021 again.

So in the tax return, I need to file 60K as my annual income, 30K in the RRSP contribution and either 6k or 9K in the withholding section

Since I already paid income tax per paycheque (on the 60K income originally), then should the withholding amount be returned to me?

Yes, since your RRSP contribution will offset the RRSP withdrawal, all holding tax from RRSP withdrawal will be refunded to you at tax filing time in 2022.

llttpp wrote: ↑ Thank you!

No, I am not buying another property. I want to use the fund for something else

For the withholding, let say I want to withdraw 30k then the withholding will be 9K. if I do 2 times * 15k, then the withholding will be 6k only. I can use that 3K in the present, rather than waiting for the tax return

Unless that something else is for education under the long term education plan, your withdrawal will trigger income tax immediately. Are you sure you want to do this? With HBP, you would've received it as a loan tax free.

Jon Lai wrote: ↑ Yes, you can withdraw same year without penalty. That's usually how people do it when they take out RRSP loans.

How can you use it to withdraw against "another investment"? It won't be your first time as a home buyer anymore if you are buying another property.

Withdrawals typically cost $50 per, so I'm not sure how you will net profit from a lower withholding rate, especially when it's just withholding, you will still end up paying the same in the end, but you will still need to pay the multiple withdrawal fees.

I never knew there was an additional cost beyond the withholding that has to be done, $50 per withdrawal sounds harsh.

badmus wrote: ↑ I never knew there was an additional cost beyond the withholding that has to be done, $50 per withdrawal sounds harsh.

That charge is by the banks, not by CRA.

You have contradictory advice. I am not certain but I believe withdrawal and deposit in the same year will negate each other and though you will get a withholding tax it will wash out when you do your taxes which look at net contribution for the year. Hopefully an accountant can chime in and confirm.

fogetmylogin wrote: ↑ You have contradictory advice. I am not certain but I believe withdrawal and deposit in the same year will negate each other and though you will get a withholding tax it will wash out when you do your taxes which look at net contribution for the year. Hopefully an accountant can chime in and confirm.

That is exactly what I said below:
Yes, since your RRSP contribution will offset the RRSP withdrawal, all holding tax from RRSP withdrawal will be refunded to you at tax filing time in 2022.

Don't you permanently lose the RRSP contribution room you contributed and withdrew? Why waste room?

fogetmylogin wrote: ↑ You have contradictory advice. I am not certain but I believe withdrawal and deposit in the same year will negate each other and though you will get a withholding tax it will wash out when you do your taxes which look at net contribution for the year. Hopefully an accountant can chime in and confirm.

I guess it depends on when the contribution was made and whether it was claimed for the current year or previous year. If OP contributed after Mar 1 2021 then yes, it's a wash, OP will get all of his 6K back and just lost the contribution rooms only. However, if OP contributed before Mar 1 and claimed it in 2020 tax refund then he will have to pay more tax at the end, unless he made similar contribution to offset that amount, then we will get back his 6K too

bomber17 wrote: ↑ Don't you permanently lose the RRSP contribution room you contributed and withdrew? Why waste room?

This is correct if RRSP contribution room is important to you. That takes you to a whole other discussion about whether RRSP's are your best choice these days for retirement savings. Many people just use TFSA's and non registered dividend paying stocks that are more tax efficient then RRSP's. A couple can receive $110K in dividends tax free if that is their only income.

bomber17 wrote: ↑ Don't you permanently lose the RRSP contribution room you contributed and withdrew? Why waste room?

he said he was going to invest something else. May be that other investment will give him better return.

bomber17 wrote: ↑ Don't you permanently lose the RRSP contribution room you contributed and withdrew? Why waste room?

It's definitely a consideration OP needs to factor in, but RRSP contribution room might not be a concern for him.

My wife will be on maternity & parental leave for the entirety of 2022. Her income for the year will be ~25 weeks of EI, so $15k pre-tax. We're seriously considering withdrawing a bunch of money out of her RRSP and topping up the ~$20k of room we have in our TFSAs.

She's smart, experienced, bilingual, and in a stable career that's always in demand. The chance of her losing her job, or not being able to find another one, is slim to none. Next year should be the lowest annual income of her life, including in retirement.

Dynatos wrote: ↑ It's definitely a consideration OP needs to factor in, but RRSP contribution room might not be a concern for him.

My wife will be on maternity & parental leave for the entirety of 2022. Her income for the year will be ~25 weeks of EI, so $15k pre-tax. We're seriously considering withdrawing a bunch of money out of her RRSP and topping up the ~$20k of room we have in our TFSAs.

She's smart, experienced, bilingual, and in a stable career that's always in demand. The chance of her losing her job, or not being able to find another one, is slim to none. Next year should be the lowest annual income of her life, including in retirement.

If going this route consider the hit to the Child tax benefit from the additional RRSP withdrawal income as well.