# Withdrawing RRSP in the same year it is deposited.



## Adrian (Apr 2, 2013)

Hi All,

I'm considering loading up a spousal RRSP account with the intent to use the money for the first home buyers plan. It will be my wife's first home purchase.

The rules state the money must be in the account for a minimum of 90 days to be eligible for use on the HBP.

Now..... the question is, if i put money into a spousal RSP and we change our minds about buying the house, can I take the money out with no additional penalty. i.e will I end up paying the same tax as I would have anyway at the end of the year . I understand there will be witholding tax until year end.

I think the only penalty is that I would lose the ability to contribute that amount to my RSP/spousal RSP?

I already contribute 5% of my income to my group RRSP and my company matches it. So we are just talking about the remaining 8% which I was never going to contribute except for this purpose (HBP) to gain a tax benefit.

Any advice is gratefully received.

hopefully this makes sense.......

Thanks

Adrian


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## none (Jan 15, 2013)

Not going to work:

"There is a three-year period of non-contributions to any spousal RRSP before the spouse can withdraw the money without attribution rules applying"


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## Spudd (Oct 11, 2011)

If you yourself are not a first-time home-buyer, your wife may not be eligible for the HBP. Here's what CRA says about it:



> You are not considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the date of withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.


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## Charlie (May 20, 2011)

The in and out in the same year would be OK as you've described it. You get the deduction for the spousal and you get the income inclusion for the withdraw (it's attributed from her). So you should be indifferent taxwise -- other than losing room and withhold timing. Same may not hold true if you do the contribution one year and withdraw another as you may straddle tax brackets and get a lesser deduction then income inclusion. And do confirm spudd's advice about whether she qualifies at all...


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## Eclectic12 (Oct 20, 2010)

Charlie said:


> The in and out in the same year would be OK as you've described it. You get the deduction for the spousal and you get the income inclusion for the withdraw (it's attributed from her)...


My understanding is that if the spousal RRSP was contributed by the other spouse (ex. higher earner contributes to lower earner's RRSP) then withdrawal will be attributed back to the higher earner (i.e. him not her).



> If you have contributed to a spousal RRSP in the current or preceding two years, the amount withdrawn will be added to your income but only up to the amount you contributed in the current and preceding two years.


http://blog.taxresource.ca/withdrawing-from-a-spousal-rrsp/

http://www.milliondollarjourney.com/how-spousal-rrsps-work.htm

Cheers


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