I wanted to withdraw $5k from my RRSP to my regular cash acccount as I need the money.
If I withdraw this money before I file my tax return on April 30th do I have to subtract the $5K from my 2011 RSSP contribution or will the $5K count as income towards 2012 with the 10% withholding fee.
I expect my income for 2012 to be low so I am would prefer the latter scenario.
It will count as income for 2012 and you'll receive a tax slip for it.
If you keep your withdrawals to 5K or less at a time you'll get the lower withholding tax of 10% (or 5% plus provincial taxes in Quebec).
Excellent. Thank you.
Originally Posted by mrPPincer
May I ask why you need to withdraw from your retirement savings? Hopefully that's not being too nosy but I would hope that this is something fairly important/urgent?
I just withdrew $5,000. There is a 10% withholding fee and a flat fee of $50 + HST for taking the money out.
1) I will need to take another $3,500 out. I want to confirm that, as MrPPincer stated, if I do this next week I will still be charged 10% withholding fee and not be bumped to the 20% withholding fee.
2) Since I am self employed, can I deduct the $50 + HST flat fees as a business expense as the withdrawals are necessary for business operations?
1) You should only be subject to the 10% withholding rate...but some institutions will "bump" you to the higher withholding rate based on their own internal rules (which may add up the lump sums, or may add them if you make more than one withdrawal in a given time period). You will need to check with your institution to be sure.
2) No, not legally.
Thank you MoneyGal. Your answer to # 2 made me chuckle.
And in the meantime you should think of moving your RSP to an institutuion that doesn't charge a $50 fee to withdraw your own money.
I made this withdrawal via BMO InvestorLine. I thought it was a standard fee?