Payments From an RRSP, a VRSP, a PRPP or a RRIF
Do not withhold income tax on periodical annuity payments from a registered retirement savings plan (RRSP). However, withhold income tax at a rate of 14% on:
- single payments from an RRSP;
- payments that are not periodic annuity payments; and
- single payments under a modified RRSP (plan that ceased to be registered as an RRSP before May 26, 1976).
- If you make a monthly periodical annuity payment of $1,000 from an RRSP, you are not required to withhold income tax on the payment.
- If you make a single payment of $6,000 from an RRSP, you are required to withhold $840 ($6,000 × 14%) as income tax from the payment.
Use the usual method to withhold income tax on periodic payments from a voluntary retirement savings plan (VRSP) or a pooled retirement pension plan (PRPP).
If you make a single payment from a VRSP or a PRPP, you must make a source deduction of income tax at the rate applicable to single payments, that is:
- 14% if the payment is $5,000 or less; or
- 19% if the payment is more than $5,000.
Use the usual method to withhold income tax from the portion of a periodic payment from a registered retirement income fund (RRIF) that exceeds the minimum amount.
In the case of a single payment, withhold 14% income tax on the portion of the payment from a RRIF that exceeds the minimum amount.
The portion of a payment from a RRIF that represents the minimum amount is not subject to source deductions of income tax, regardless of whether it is a periodic or a single payment.
You are not required to withhold income tax on single payments from an RRSP, a VRSP a PRPP or a RRIF if the amounts are transferred directly to another plan (RRSP, VRSP, PRPP, RPP or RRIF) 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.
You are not required to withhold income tax from any of the following amounts from an RRSP:
- an amount withdrawn under the Home Buyers' Plan (HBP), to a maximum of $35,000;
- an amount withdrawn under the Lifelong Learning Plan (LLP), to a maximum of $10,000 per year and $20,000 for the LLP participation period; and
- an amount withdrawn that you can reasonably consider to be a refund received for unused contributions previously made to an RRSP, that the beneficiary can deduct in calculating their income.
You are not required to withhold income tax on a single payment from an RRSP that is transferred directly to a first home savings account (FHSA) without being paid to the beneficiary if the amount of the transfer does not exceed the unused FHSA participation room at the time of the transfer. If only a portion of the funds is transferred, you must withhold income tax on the portion that was not transferred directly.