Transfers out of an RRSP
Published: Oct 17, 2022
Updated: Dec 16, 2024
Explore the potential tax implications of transferring cash or investments out of your RRSP.
Because Registered retirement savings plans (RRSPs) are registered with the CRA and come with tax benefits & limitations, internal transfers of either cash or investments out of these types of accounts have special considerations. (Unless the transfer is going to another RRSP for the same individual.)
Any transfers of cash or investments out of an RRSP are treated the same way as a regular withdrawal to your bank account in the eyes of the CRA, and may incur additional taxes.
You are taxed a ‘withholding amount’ when transferring funds or investments out of your RRSP to help cover any income taxes owing as a result of the transfer. The withholding amount may or may not completely cover any potential future taxes, this depends on your total overall income and other factors like deductions and etc.
For example: You have a yearly income of $45,000 and live in Ontario paying a base tax rate of approximately ~20% (Combined federal & provincial). If you transfer $5,000 out of your RRSP, the withholding taxes may not completely cover potential future income taxes.
If you transfer $16,000 however, you may be entitled to a tax refund, as the withholding amount is slightly higher than your base tax bracket.
This is for example and educational purposes only, Questrade is unable to provide specific tax advice pertaining to your financial situation.
Please double check with a tax professional if you have doubts about the tax implications of a transfer out of an RRSP.
Review the chart below to determine how the gross amount of your transfer will be taxed.
Withholding Tax Thresholds
Amount withdrawn | Tax withheld | Tax withheld (Quebec) |
$0 - $5,000 | 10% | 19% (5%¹ + 14%²) |
$5,000.01 - $15,000 | 20% | 24% (10%¹ + 14%²) |
$15,000.01 + | 30% | 29% (15%¹ + 14%²) |
Withholding taxes for Quebec residents include both the CRA (opens in a new tab) and Revenu Quebec (opens in a new tab) withholding amounts combined.
¹Represents the CRA withholding amount. ²Represents the Revenu Quebec withholding amount.
The tax withheld may not always be enough to account for the tax you owe for your tax bracket. You may be asked to pay more on the withdrawal when you include the withdrawal on your income tax and benefit return for that year.
For USD transfers: USD transfers are represented as the CAD equivalent to determine which ‘tier’ of withholding tax is applied.
For example: A transfer of $4,500 USD will actually be charged 20% withholding tax. This is because $4,500 USD x FX rate of 1.3 USD/CAD will be over $5,000 CAD and into the 20% tier.
Please note: Transfers out of an RRSP account will also incur deregistration fees.
$50+HST for a partial transfer request if the account is not closed and a cash balance or investments remain.
$100+HST for a “full” transfer request when the account is closed.
Transferring cash out of an RRSP
Transferring cash out of an RRSP You can request a transfer of either Canadian or U.S. dollars out of your RRSP account using the Move Money > Transfer page, then clicking Transfer funds.
The withholding taxes will be applied to the gross amount of the transfer.
For example: You request to transfer $6,000 CAD out of your RRSP into your Margin account, and you are charged a partial deregistration fee of $50.
The net amount of $5,950 falls into the 20% withholding tier (for a non-Quebec resident), therefore the gross withdrawal amount equals ($5950 / 0.8) = $7,437.50
Therefore, the amount of cash necessary in the RRSP to cover the withholding taxes would be the difference between the gross and the net at $1,487.50 CAD.
Transferring investments out of an RRSP
You can request to transfer your investments out of your RRSP by logging in, heading to the Move Money > Transfer page, and clicking Transfer investments.
Withholding taxes are applied to the gross amount of the market value of the investments, and charged to your cash balance in the RRSP.
Because Questrade does not sell your investments during this type of request, you are required to have the cash balance available in your RRSP account to cover these withholding taxes.
When you transfer investments out of an RRSP, you have a few choices as to which market value is represented, depending on the type of investment. This will affect what price we are using, and how much withholding taxes will be applied.
Type of investment | Available prices |
|---|---|
Stocks, Options and ETFs | High of the day, low of the day, or closing price on date of request |
Mutual Funds | Closing price on date of request |
Bonds | Closing price on date of request |
Physical Gold/Silver | End of day price from the previous business day (Approximately 5:15 pm ET) |
To indicate which price you’d like Questrade to use for determining your transfer amount, you can leave a comment on the request after it has been placed. You can leave comments by going to the Move money history section and selecting the transfer you want to update.
Please note: Depending on the receiving account type, there may be additional tax implications to be aware of (i.e. TFSA contribution limits).
Explore the related articles in this lesson for more information on asset transfers.
