I turn 70 this year. What tax would I pay if I made a $10,000 withdrawal from my RRSP? Would it be better to convert it to a RRIF now?
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Our response:
Regardless of whether a withdrawal is from a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF), the amount of the withdrawal is counted toward your income for the year and must be reported at tax time.
The difference may be in the withholding taxes. For RRSPs, there is a withholding tax on the total amount of the withdrawal. The amount of the withholding tax depends on how much you withdraw. Learn more about making RRSP withdrawals before you retire.
With a RRIF, you pay a withholding tax on the amount of the withdrawal above your minimum annual withdrawal. Learn more about making withdrawals from a RRIF.
Depending on your total annual income, you may pay additional tax at tax time in addition to the withholding tax. We are not able to provide advice such as whether you should convert your RRSP to a RRIF as this decision depends on many individual factors. Speak to a registered financial advisor or tax professional about your options and to decide what is right for you.