Worked Scenarios and Checklists
RRSP withdrawal withholding tax in 2026: 10%, 20%, 30% (and Quebec's rates) with worked examples
How much tax is withheld when you cash out RRSP money in 2026, the Quebec rates, why splitting withdrawals does not save tax, the balance owing at filing and when no tax is withheld.
When you withdraw from an RRSP, your institution withholds tax at source on each payment: outside Quebec, 10% on amounts up to $5,000, 20% on $5,000.01 to $15,000 and 30% above $15,000. Quebec residents have a lower federal portion (5%, 10% or 15%) plus Quebec withholding, about 19%, 24% or 29% in total for 2026. Withholding is only a prepayment: the whole withdrawal is added to your income for the year and taxed at your marginal rate when you file, so many people owe more in April. The room you used is not restored, except for Home Buyers' Plan and Lifelong Learning Plan withdrawals.
This guide is part of the scenarios hub. General information, not tax advice.
The 2026 lump-sum withholding rates
| Amount of the single withdrawal | Outside Quebec | Quebec residents (federal + Quebec) |
|---|---|---|
| Up to $5,000 | 10% | 5% + 14% = 19% |
| $5,000.01 to $15,000 | 20% | 10% + 14% = 24% |
| Over $15,000 | 30% | 15% + 14% = 29% |
| Non-residents of Canada | 25% Part XIII tax (a treaty may reduce it for periodic payments) | Same |
The Quebec provincial rate shown is the figure published in institutions' 2026 tables; confirm it with Revenu Québec, which sets it. The band applies to each payment, not to your total for the year.
Worked example 1: a $12,000 withdrawal in Ontario
An illustrative employee earns $70,000 and withdraws $12,000 from an RRSP in 2026 to cover a gap between jobs.
| Step | Amount |
|---|---|
| Withdrawal | $12,000 |
| Withholding at 20% | −$2,400 |
| Cash received | $9,600 |
| Added to income | $70,000 + $12,000 = $82,000 |
| Combined marginal rate on that slice (2026, Ontario) | 29.65% |
| Actual tax on the withdrawal | about $3,558 |
| Extra owing when filing | about $1,158 |
The extra $1,158 is due by April 30, 2027. Planning for it, rather than spending the whole $9,600, avoids a surprise balance. If the person's income dropped because of the job gap, the real tax could be lower than the withholding and produce a refund instead.
Worked example 2: the same withdrawal in Quebec
The same $12,000 withdrawn by a Quebec resident: 24% withheld ($2,880; $1,200 federal and $1,680 Quebec), cash received $9,120. The withdrawal is taxed on both the federal and Quebec returns, and the federal part of the withholding is credited on the federal return and the Quebec part on the TP-1.
Splitting withdrawals: why it only changes timing
Taking $12,000 as three withdrawals of $4,000 means each is in the 10% band: $1,200 withheld instead of $2,400. The tax owed does not change; you simply pay more at filing. Some institutions apply the rate to the total if several withdrawals are requested at the same time. There is no penalty for doing it, but there is no saving either, and some institutions charge a fee per withdrawal (check the fee schedule; any fee you enter in the calculator is illustrative).
Conversely, you can ask for more tax to be withheld if you know your marginal rate is higher than the band, so you do not owe at filing.
When no tax is withheld
| Withdrawal | Withholding |
|---|---|
| Home Buyers' Plan withdrawal with Form T1036 | None |
| Lifelong Learning Plan withdrawal with Form RC96 | None |
| RRIF minimum amount | None |
| Direct transfer to another RRSP or RRIF (Form T2033) | None (it is not a withdrawal) |
| Transfer to an FHSA within FHSA room (Form RC720) | None |
| Refund of undeducted over-contributions with Form T3012A approved | None (and an offsetting deduction may be available) |
| RRIF payments above the minimum | Lump-sum rates on the excess |
Who should think twice before withdrawing
- People in a high-income year: the withdrawal is taxed at the top of your income, often 40% or more combined in higher brackets.
- Recipients of income-tested benefits: an RRSP withdrawal raises net income and can reduce the Canada Child Benefit, the GST/HST credit (now the Canada Groceries and Essentials Benefit) and, for seniors, OAS and the Guaranteed Income Supplement.
- Anyone using a withdrawal to move money: use a direct transfer instead; see transfers between institutions.
- Spousal RRSP annuitants within the three-year window: see the spousal RRSP example.
On the other hand, a deliberate withdrawal in a low-income year (a sabbatical, early retirement before CPP and OAS) can be an efficient way to draw down an RRSP at a low rate, which may reduce later RRIF minimums and OAS clawback; see OAS clawback.
Slips and reporting
Your institution issues a T4RSP slip (and an RL-2 slip in Quebec) showing the gross withdrawal in box 22 and the tax withheld in box 30. Report the income on line 12900 and claim the tax withheld on line 43700 of your federal return. Withdrawals from a locked-in account (LIRA, LIF) follow pension legislation, not these rules, and are generally restricted.
Frequently asked questions
Can I avoid withholding by withdrawing in small amounts?
You can reduce the amount withheld, but not the tax owed. The difference shows up as a balance owing when you file.
Is RRSP withdrawal withholding refundable?
Yes, if it exceeds your actual tax for the year, the excess is refunded when you file.
Do I get my RRSP room back if I repay the money?
No, apart from HBP and LLP repayments. A new contribution uses new room.
How long does a withdrawal take?
It depends on the institution and on whether investments must be sold first. Sales of securities typically settle within one business day.
Official sources
- Canada Revenue Agency — withholding rates on lump-sum payments, T4RSP and guide T4040
- Revenu Québec — Quebec source deductions on lump-sum payments from RRSPs
- Justice Laws Website — Income Tax Regulations section 103 (lump-sum withholding)
- Financial Consumer Agency of Canada — managing registered savings
