What happens to my RRSP when I retire? (2024)

FAQs

What happens to my RRSP when I retire? ›

Once you retire, you can convert it into a Registered Retirement Savings Plan (RRIF. + read full definition ) or annuity. + read full definition , to provide a regular stream of retirement income. Or you can withdraw your savings in cash.

At any age up to the end of the year you turn 71, you can choose one of the following options for your RRSPs: You can transfer your RRSP funds to a registered retirement income fund (RRIF). Starting in the year after the year you establish a RRIF, you have to be paid a yearly minimum amount.

If you have an RRSP and you move out of Canada permanently, you can either choose to: Make a lump sum withdrawal and deregister your RRSP. You'll have to pay withholding tax and income tax on the amount withdrawn. Keep your RRSP and have your investments grow tax-deferred for Canadian tax purposes.

In the year you turn 71 years old, you have to choose one of the following options for your RRSPs: withdraw them. transfer them to a RRIF. use them to purchase an annuity.

You have up to 15 years to repay to your registered retirement savings plan (RRSP), pooled registered pension plan (PRPP) or specified pension plan (SPP) the amounts you withdrew from your RRSP under the Home Buyers' Plan (HBP).

Your RRSP reaches maturity on the last day of the calendar year you turn 71. At this point, you can access your RRSP assets through 3 maturity options. The tax implications of your decision depend on the option that you choose.

$129,000. According to Ratehub, the average 65-plus-year-old Canadian has $129,000 saved in their RRSP. The figure rises to about $160,000 if you include the Tax-Free Savings Account (TFSA).

Canadian citizens who live and work in the United States may contribute to an RRSP as long as they keep within the contribution threshold. Canadians may keep their RRSP intact when they move to the United States and let the income grow tax-deferred for Canadian tax purposes.

You'll miss out on the advantages of compound interest

This is compound interest. When you take money out of your RRSP early, you lose the opportunity to earn money while it's invested. Remember, the government will not tax you on money growing in your RRSP until you take it out.

By withdrawing the RRSP funds while a non resident, generally the lower of the non resident withholding tax rate and the amount taxable under section 217 will apply, providing the individual with a unique opportunity to withdraw RRSP accumulations at much lower rates of tax than would otherwise be payable if they were ...

What is the 3 year rule for RRSP? ›

Spousal RRSPs come with a three-year attribution rule, which only permits withdrawals three years after the deposit date. So, for example, if you deposit funds into a spousal RRSP on January 1, 2024, your spouse or common-law partner won't be able to withdraw the funds until January 1, 2027.

If instead of transferring into a RRIF, you choose to withdraw your RRSP as a lump sum, then it is treated as taxable income – which could result in a substantial tax hit.

Before December 31 in the year you turn 71, you have two options when it comes to your RRSP: You can convert it to an annuity, or roll your funds over to a Registered Retirement Income Fund (RRIF).

Canadian citizens that have become non-residents can continue to hold RRSPs after leaving Canada.

You can withdraw from most RRSPs before or after you retire. But it's important to understand how and when you make a withdrawal impacts your taxes.

Just know that you'll have pay tax on any RRSP withdrawals (10% on withdrawals up to $5,000, 20% on withdrawals above $5,000 and up to $15,000, and 30% for withdrawals above $15,000).

RRSP withdrawals at age 55

Plus, the withdrawal increases your taxable income for the year, which could bump you into a higher tax bracket. And the money you withdraw reduces your RRSP contribution room, which limits your future retirement savings potential.

Before December 31 in the year you turn 71, you have two options when it comes to your RRSP: You can convert it to an annuity, or roll your funds over to a Registered Retirement Income Fund (RRIF).

If you withdraw the unused contributions, you have to include them as income on your income tax and benefit return. However, you may be able to deduct an amount equal to the withdrawn contributions that you include in your income.