Before we look at the withholding taxes on withdrawals from registered retirement income funds (RRIFs), let’s first review the withholding taxes on withdrawals from registered retirement savings plans (RRSPs).
What is the RRSP withholding tax?
RRSP contributions are tax-deductible, and income and growth are tax-deferred. However, withdrawals from an RRSP are taxable and generally subject to withholding tax, unless they are made using the Home Buyers’ Plan (HBP) for an eligible home purchase or the Lifelong Learning Plan (LLP) for qualifying post-secondary education.
Withholding tax is the percentage of your withdrawal that is kept at the source, which is the financial institution where you hold your RRSP…