Is the tax higher when a withdrawing from a RRIF or RRSP?
Similar to RRSPs, all withdrawals from a RRIF are fully taxable as income in the year withdrawn (generally between 10% – 30%). Withholding taxes also apply on withdrawals that exceed your minimum withdrawal amount and if you live in Quebec, provincial taxes may also be withheld in addition to federal taxes. Your financial institution will hold back an amount, based on the withholding tax rates, and pay it directly to the government(s) on your behalf. Despite withholding taxes being deducted from withdrawals, you will also have to report the withdrawal as income and may need to pay additional tax later when you file your income tax return depending on your overall tax situation.
Visit GetSmarterAboutMoney.ca to learn about making withdrawals from your RRIF and tax on investments. We are not able to provide advice but try to provide general information to help with the next step. Speak with a registered financial representative or tax professional for advice.