# Transferred RRSP, taxes withheld



## rd_aaron (Jun 24, 2011)

On February 28th of 2011 I received a company bonus and put about $5k into an RRSP at my bank (CIBC). At the time I didn't have an account anywhere else and it was the quickest way to get money into the RRSP before the deadline. A couple of months later, I opened an account at Questrade as I wanted to go self-directed. I pulled the money I had in my CIBC RRSP and put it in my Questrade account. However, when I took it out of the RRSP at CIBC, they withheld 10% which went straight to the government.

My question is, now that I have that same $5k in my RRSP, when I file my taxes do I have to account for this or if I leave RRSP contributions as $0 will I get that 10% back in my refund?


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## MoneyGal (Apr 24, 2009)

I'm not sure I totally understand your question. You put $5000 into an RRSP, and then you moved the money into a different account, and 10% was withheld, but you still have $5000 in there? Or do you have $4500?

At any rate, the answer is probably this: instead of effecting a transfer, you WITHDREW the money. If you had gone back to CIBC within a short time after the withdrawal and had them re-code it as a TRANSFER, not a withdrawal; you would probably be able to back out the taxes and have the 10% reimbursed back to you. 

However, it may now be too late to do that, in which case you will have a withdrawal and then a recontribution. I don't know the ultimate impact on your tax payable or your refund.


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> At any rate, the answer is probably this: instead of effecting a transfer, you WITHDREW the money. If you had gone back to CIBC within a short time after the withdrawal and had them re-code it as a TRANSFER, not a withdrawal; you would probably be able to back out the taxes and have the 10% reimbursed back to you.


I would still try to get the withdrawal redone as a transfer - it's only been a couple of weeks since the original transaction.

If you can't do it - it just means you burned $5k of your RRSP contribution room. Not the worst thing in the world.

I also have no idea what your actual question is about the taxes.


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## rd_aaron (Jun 24, 2011)

Sorry, I didn't word my question very well. Also Four Pillars, this transaction was February 28th of 2011, not 2012.

Let's put it this way:

- February 28th of 2011 I put $5000 into CIBC RRSP, so I got a refund for 2010 tax year.
- May of 2011, I withdrew $4500 ($5000 - 10% withheld) from CIBC RRSP leaving me with $0 in my RRSP.
- As of February 28th of 2012, I had a total of $5000 in my Questrade RRSP (and still $0 in my CIBC RRSP). Basically my net contribution from last year to this year was $0.. I just moved it from CIBC to Questrade.

I wasn't aware I could do it as a "transfer". Therefore, I guess it looks like a withdrawal, and recontribution.

My question is, how do I get back that 10% withheld when I withdrew from CIBC. When I do my income taxes, do I put a $0 RRSP contribution since my net contibution this year is $0 (i.e. withdrew $5000 and then recontributed $5000).

Hopefully that makes a little more sense.


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## MoneyGal (Apr 24, 2009)

The $5000 will be added to your income and you would only get a full return of thf 10% if you have no other tax owing and are due a refund. If you have other taxzble income for the year, you may in fact end up owing some tax on ghe withdrawal. (I'm on my phone; lots of typing errors!)


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## Zeeshan Hamid (Feb 28, 2012)

rd_aaron said:


> Sorry, I didn't word my question very well. Also Four Pillars, this transaction was February 28th of 2011, not 2012.
> 
> Let's put it this way:
> 
> ...


You contributed $5000, your contribution isn't $0. The money you put in your Questrade RRSP was a contribution. 

You also withdrew $5000. 10% was just withholding, you'll likely owe more tax on it


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## OhGreatGuru (May 24, 2009)

In addition to which, you had better check to see if you have overcontributed. Unfortunately, you did not follow the correct procedure to transfer money from one RRSP to another. That has to be done institution - to institution. You withdrew $5K, of which $500 was withheld for taxes, and lost the contribution room. This withdrawal is taxable income for 2011. If you have since contributed $5K of new money to your RRSP you have used up another $5K of contribution room.


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## Eclectic12 (Oct 20, 2010)

rd_aaron said:


> Sorry, I didn't word my question very well.
> 
> [ ... ]
> 
> ...


Since this is not a transfer - which would keep the money tax sheltered, by definition it is an RRSP withdrawal and then *another* RRSP contribution. I say another because the first CIBC RRSP contribution used up $5K of contribution room and the Questrade RRSP contribution has used up a second $5K for a total of $10K RRSP room used, even though there is only $5K in the RRSP.

Over and above avoiding the withholding tax and any additional income tax, the RRSP transfer does not use up contribution room.


Also - to end up to end up with $5K in the Questrade RRSP, you only had $4500 from the CIBC withdrawal, when you say the Questrade RRSP is at $5K, this means you added an extra $500 from other money. 


As for getting back the 10% withholding tax, file your 2011 tax return and claim the $5K Questrade RRSP contribution. You may still owe tax, though. 

Your final 2010 taxable income had the $5K CIBC RRSP contribution reduce the this amount. 

For the 2011 tax return, *if you income has stayed the same*, the CIBC withdrawal adds an extra $5K to your income, then the Questrade RRSP contribution reduces your income by the same $5K. The net result is as if you didn't make an RRSP contribution in 2011 at all!

The main way I can see that the withholding tax could be refunded is if your 2011 income has dropped by $5K or more for other reasons (ex. made extra charitable donations, didn't work as much as last year).


Cheers


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## rd_aaron (Jun 24, 2011)

Eclectic12 said:


> Since this is not a transfer - which would keep the money tax sheltered, by definition it is an RRSP withdrawal and then *another* RRSP contribution. I say another because the first CIBC RRSP contribution used up $5K of contribution room and the Questrade RRSP contribution has used up a second $5K for a total of $10K RRSP room used, even though there is only $5K in the RRSP.
> 
> Over and above avoiding the withholding tax and any additional income tax, the RRSP transfer does not use up contribution room.
> 
> ...


Thanks. I believe this answers my question. I guess it sucks that I lost the contribution room, but at least it's not a huge amount. Live and learn.

Just to clarify, I'll add $5k to my income (from the CIBC withdrawl) and put $5k as my RRSP contribution this year (Questrade). The net result is, as you said, the same as if I didn't make a contribution at all. Assuming that I have paid the exact right amount of tax this year (not considering this RRSP), CRA will see that I've paid $500 (10% witholding tax) too much and issue a refund?


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## mrPPincer (Nov 21, 2011)

Yep, you should have already recieved a T4RSP for your withdrawal from CIBC.
In box 22 will be the withdrawal and commutation payments and in box 30 will be the income tax deducted.
Just put those numbers in their appropriate places on your return.


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## MoneyGal (Apr 24, 2009)

We don't know enough about your situation in order to provide a decent guess. One problem is that we aren't clear about how much you actually contributed to the Questrade RRSP. Is it $5000, or $4500? If it is $5000 (an extra $500), then you will get a refund for that new contribution. If it is $4500, then you have no net new dollars in your RRSP. 

It is unlikely that you will NOT owe money - the 10% withholding tax is a minimal amount. You probably will owe more unless, as Eclectic12 pointed out, your overall tax situation includes other deductions and credits (i.e., charitable donations, etc.)


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## rd_aaron (Jun 24, 2011)

MoneyGal said:


> We don't know enough about your situation in order to provide a decent guess. One problem is that we aren't clear about how much you actually contributed to the Questrade RRSP. Is it $5000, or $4500? If it is $5000 (an extra $500), then you will get a refund for that new contribution. If it is $4500, then you have no net new dollars in your RRSP.
> 
> It is unlikely that you will NOT owe money - the 10% withholding tax is a minimal amount. You probably will owe more unless, as Eclectic12 pointed out, your overall tax situation includes other deductions and credits (i.e., charitable donations, etc.)


I have $5000 in my Questrade RRSP as I indicated here:



> - As of February 28th of 2012, I had a total of $5000 in my Questrade RRSP (and still $0 in my CIBC RRSP). Basically my net contribution from last year to this year was $0.. I just moved it from CIBC to Questrade.


If I had just left the $5000 in my CIBC RRSP, I was still expecting a refund. I'm not sure why I should be expecting to owe money, especially when I've already paid an additional $500 in tax. I'm expecting to get a small refund plus this 10% withholding tax back as my re-contribution should cancel out the extra income I will have to claim.


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## rd_aaron (Jun 24, 2011)

mrPPincer said:


> Yep, you should have already recieved a T4RSP for your withdrawal from CIBC.
> In box 22 will be the withdrawal and commutation payments and in box 30 will be the income tax deducted.
> Just put those numbers in their appropriate places on your return.


Yes, I have received that. I will make sure to do that. Thanks.


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## MoneyGal (Apr 24, 2009)

How did you get $5000 in your Questrade RRSP if $500 was withheld from the $5000 you transferred over? Did your investments grow by $500 during the year (i.e., are you giving us the market value), or did you add another $500 to make the total contributions $5000?


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## rd_aaron (Jun 24, 2011)

MoneyGal said:


> How did you get $5000 in your Questrade RRSP if $500 was withheld from the $5000 you transferred over? Did your investments grow by $500 during the year (i.e., are you giving us the market value), or did you add another $500 to make the total contributions $5000?


I added another $500 to make it $5000.


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## Eclectic12 (Oct 20, 2010)

rd_aaron said:


> [ ... ]
> 
> If I had just left the $5000 in my CIBC RRSP, I was still expecting a refund. I'm not sure why I should be expecting to owe money, especially when I've already paid an additional $500 in tax. I'm expecting to get a small refund plus this 10% withholding tax back as my re-contribution should cancel out the extra income I will have to claim.


There is a problem with "expecting a refund".

In your other post, you said:


> _February 28th of 2011 I put $5000 into CIBC RRSP, so I got a refund for 2010 tax year._


This implies that refund was from the CIBC $5K RRSP contribution that *was* used for the 2010 tax year and is not available for the 2011 tax year.

If the implication is true, then my previous statement that where your other income has stayed the same, likely taxes are going to be coming due April 30th is true.

... unless you are in a 10% tax bracket .... 



If on the other hand, you received a refund from your 2010 tax return *without* claiming the CIBC $5K RRSP - then you are in better shape (i.e. $10K RRSP contributions to claim versus the added $5K income from the RRSP withdrawal).


It would help if you confirmed if whether or not the CIBC $5K RRSP contribution has been used. 


Cheers


*P.S.* I noticed that my long post was quoted in it's entirety. It helps make the conversation clearer by trimming the quote down to the key points.


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## rd_aaron (Jun 24, 2011)

I said "expecting a refund" because I have extra deductions and I've paid more tax this year than I need to (if I completely ignore the RRSP altogether). I didn't mean that I was going to use the same RRSP contribution twice.


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## Eclectic12 (Oct 20, 2010)

rd_aaron said:


> I said "expecting a refund" because I have extra deductions and I've paid more tax this year than I need to (if I completely ignore the RRSP altogether). I didn't mean that I was going to use the same RRSP contribution twice.


Ah! That make more sense.


Cheers


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