Go to Main Content

Advertisement

By Bruce Sellery on January 27, 2016
Estimated reading time: 1 minute

Tax-efficient ways to withdraw from your RRSP

By Bruce Sellery on January 27, 2016
Estimated reading time: 1 minute

Take out as little as you can to extend tax deferral

Advertisement

A: Last year, in my mid-50s, I was diagnosed with a serious ailment, which forced me to quit my job and start collecting long-term disability. Since I don’t have taxable income for this year, and most of my assets are in my RRSP, what would be the most tax-efficient way for me to withdraw money from my RRSP savings? —R.J., Mississauga, Ont. Q: Take out as little as you can, to extend the tax deferral as long as you can, says Dean Paley, Burlington, Ont.-based CPA. “If you are single, then you might want to withdraw $11,327—the basic personal tax amount.” You would have no tax payable at the end of the year. If you are married, this strategy doesn’t work because your spouse would have claimed the credit and drawing out from the RRSP means no tax is saved in the transaction. If this is the case, defer taking funds from the registered plans as long as possible. In looking at your retirement, you should also consider what you’ll get from CPP and OAS. You should also consider whether you may be able to re-enter the workforce down the road. All that said I recognize that your income needs may make it difficult to hold off on drawing from you RRSP. Best of luck to you on your health.

Bruce Sellery is a frequent guest on Cityline, and also writes for Today’s Parent and Chatelaine. Do you have your own personal finance question? Write to us at [email protected]

About Bruce Sellery

Bruce Sellery is the CEO of Credit Canada, the country’s longest-standing non-profit credit counselling agency. He is a former MoneySense columnist.

Comments Cancel reply

Related Articles

Can Canadian investors save tax when a stock’s company goes bankrupt?

You may be able to get some tax relief when the stock of a company you hold goes bankrupt....

Can Canadian investors save tax when a stock’s company goes bankrupt?

Why I’m optimistic about the markets in 2025–tariffs or no

This advisor isn’t losing any sleep over the markets. In fact, looking back at 2024 and forward into 2025,...

Why I’m optimistic about the markets in 2025–tariffs or no

A dad and teenage son hug while playing basketball on their driveway

How much money should I have saved by age 40?

How much money should I have saved by age 40?

Shanghai aerial view with urban architecture at dusk

Buying China ETFs in Canada: Is it worth it?

Are Chinese equity ETFs a paper tiger? Chinese stocks offer value now, but beware the drawbacks that can weigh...

Buying China ETFs in Canada: Is it worth it?

US money, US flag and stock market graphs.

Making sense of the markets this week: December 15, 2024

Bank of Canada makes a big cut, U.S. inflation is up, Oracle ends a great year on a low...

Making sense of the markets this week: December 15, 2024

RBC’s discount broker launches international trading—what to know before you invest

It’s a first among bank-owned discount brokers in Canada. With more banks likely to follow RBC's lead, what should...

RBC’s discount broker launches international trading—what to know before you invest

Little figurine men in front of the stock ticker tape

Making sense of the markets this week: December 8, 2024

Canada bank earnings remain on target, Dollarama’s expectations catch up to it, “insider selling” sets a new record, and...

Making sense of the markets this week: December 8, 2024

woman works on laptop December indoor scene

Year-end tax-saving tips for Canadians for 2024

Tax planning in Canada isn’t just for March and April. These smart tax moves need to be made before...

Year-end tax-saving tips for Canadians for 2024

A young man with Down syndrome helps a woman water a house plant

RDSP myths, explained

RDSP myths, explained

A group of teenagers all on their cellphones, checking their investments, we hope.

How to invest as a teenager in Canada

How to invest as a teenager in Canada