Payments from an RRSP, a VRSP, a PRPP or a RRIF

Source deductions of income tax

If you make a payment from a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF), the payment is not subject to source deductions of income tax, unless it is:

  • a single payment from an RRSP;
  • a payment that is not a periodic annuity payment; or
  • the portion of a payment from a RRIF that exceeds the minimum amount.

If you pay a benefit from a voluntary retirement savings plan (VRSP) or a pooled registered pension plan (PRPP) as a single payment or as a periodic annuity payment, the payment is subject to the source deduction of income tax.

RRSPs, VRSPs and PRPPs

Periodic annuity payments made from an RRSP are not subject to source deductions of income tax. However, a single payment made from an RRSP is subject to a source deduction of income tax of 16% of the amount.

Periodic annuity payments made from a PRPP or a VRSP are subject to source deductions of income tax. For a single payment made from a PRPP or a VRSP, click Single Payments.

For example:

  • If you pay a monthly benefit of $1,000 from an RRSP, do not withhold income tax from the benefit.
  • If you make a single payment of $6,000 from an RRSP, you must withhold $960 in income tax from the payment.

You must also withhold income tax at a rate of 16% from a single payment made under a modified RRSP (plan that ceased to be registered as an RRSP before May 26, 1976).

Exception

As a rule, single payments from an RRSP, a VRSP or a PRPP are not subject to source deductions of income tax if the amounts are transferred directly to another RRSP, VRSP, or PRPP, or to a RRIF or registered pension plan (RPP), without being paid to the beneficiary. If only a portion of the payment is transferred directly to another plan, you must withhold income tax from the portion that is not transferred directly.

If the following amounts are from RRSPs, they are also not subject to source deductions of income tax:

  • amounts withdrawn under the Home Buyers' Plan (HBP), to a maximum of $25,000;
  • amounts withdrawn under the Lifelong Learning Plan (LLP), to a maximum of $10,000 per year and $20,000 for the LLP participation period; and
  • amounts you can reasonably consider to be a refund received for undeducted contributions previously made to an RRSP that the beneficiary may deduct in his or her income tax return.

RRIFs

You must withhold income tax from the portion of a payment from a RRIF that exceeds the minimum amount. In the case of a periodic payment:

In the case of a single payment, you must make a source deduction of income tax of 16% of the portion of the payment that exceeds the minimum amount.

The portion of payments from a RRIF that represents the minimum amount is not subject to source deductions of income tax, regardless of whether they are periodic or single payments.

Exception

Single payments from a RRIF are not subject to source deductions of income tax if the amounts are transferred directly to another RRIF, or to an RRSP, a VRSP, a PRPP or an RPP, without being paid to the beneficiary. If only a portion of the payment is transferred directly to another plan, you must withhold income tax from the portion that is not transferred directly.

Last Updated: