Depending on your plan, withdrawals from your Group RRSP may require approval from your employer. Otherwise, they work much the same way as withdrawals from an individual RRSP.
There are three types of RRSP withdrawals, each with their own process and tax implications:
- Home Buyers’ Plan
- Lifelong Learning Plan
Normal withdrawals require you to pay withholding tax on the amount. Wealthsimple automatically removes this from your withdrawal and pays it to the government. The amount depends on your province of residence, but it can be anywhere from 10% to 31%.
For specific tax information and step-by-step instructions on how to make this type of RRSP withdrawal, check out this help article.
Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from your RRSP within a calendar year to buy or build your first home (or for a related person with a disability). But there are a couple stipulations.
- Funds must be in your RRSP for at least three months before they can be used for an HBP withdrawal.
- Funds must be repaid to your RRSP account within a 15-year period, starting the second calendar year after your withdrawal (i.e. if you withdraw in 2021, you have until March 1 of 2023 to start repaying).
For step-by-step instructions on how to make a HBP withdrawal, check out this help article.
The Lifelong Learning Plan (LLP) lets you withdraw up to $20,000 from your RRSP to pay for full or part-time education and training. Again, there are a few stipulations:
- Funds must be in your RRSP for at least three months before they can be used for an LLP withdrawal.
- You can only withdraw a maximum of $10,000 per calendar year.
- You can't use the LLP to pay for a child's education. If you're looking to save for a child's education, consider opening an RESP.
For step-by-step instructions on how to make an LLP withdrawal, check out this help article.