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Ontario|Investments & SecuritiesRRSPs and RRIFs 270 Tax Consequences of withdrawing from your RRSP Depending on the type of RRSP investment you purchase, you may be able to withdraw money at any time. When you withdraw money from your RRSP, it will be taxed as income. You must include the amount you withdraw on your tax return as part of your total income for the year. This will probably increase the amount of income tax you must pay.
Many people wait until they retire to withdraw money from their RRSP. This is because when you retire, your income usually decreases, so that when you add your income for the year to the amount that you withdraw from your RRSP, your total income is still low enough to keep you in a lower tax bracket.
Even if you are not retired, but your income is very low, you may want to withdraw money from your RRSP to supplement your income. Depending on the income you earn and the amount of money you want to withdraw, this may affect the tax bracket you are in. If you are unsure about how to calculate your own tax rates, you should contact an accountant, a tax lawyer, or a financial advisor.
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