You can withdraw from an RRSP, but it isn’t recommended unless you’re retiring or using the money under the Home Buyers Plan or Lifelong Learning Plan. Withdrawing money from an RRSP comes with tax implications and withdrawal fees.
A $25.00 (+ tax) fee is charged on partial withdrawals (or HBP/LLP withdrawals) from an RRSP and a $50.00 (+ tax) fee is charged on full withdrawals. This is standard across financial institutions, as those accounts are registered with the government.
Withdrawals from RRSP will count as income, and will therefore also be taxed.
Accordingly, there is a standard amount of tax withheld on RRSP withdrawals of varying amounts, as determined by the Government of Canada, namely:
👉 10% on amounts up to $5,000
👉 20% on amounts over $5,000 up to including $15,000
👉 30% on amounts over $15,000
For Quebec residents, the provincial withholding rate is 16%, added to the CRA withholding tax of 5%, 10% and 15% on withdrawals of under $5,000, $5,000 to $15,000 and over $15,000, respectively. In addition, Quebec withholding tax only applies to single withdrawals from an RRSP. If you receive regular periodic payments (i.e. monthly), they are not subject to withholding tax.
RRSPs are meant to be used to save for retirement. The best way to use an RRSP is to contribute steadily over decades without withdrawing. This gives you the best chance of funding your retirement.