Thanks for the video! I've got 2 questions. 1. What's the earliest I can withdraw as a 'retired person' without the heavier early withdrawal tax penalties? What if I retire when I'm younger like 45? 2. What happens if I contribute to the RRSP for the current year (2023) before March 1st? Can I count it towards or 2023 or do all pre-March 1st contributions count towards the previous year since that's the deadline?
Hey Gareth, thanks for your questions! 1. There aren't actually any "tax penalties" for withdrawing funds early. Your RRSP provider will withhold tax from the withdrawal amount the same way that an employer would withhold tax from a pay cheque. You're given credit for this tax paid when you go to file your tax return. If your calculated taxes payable for the year are less than you've already paid, you'll get a refund of that overpayment (same as with employment income and taxes withheld). 2. You can deduct Jan/Feb 2023 RRSP contributions against 2023 income as long as you haven't deducted them on your 2022 tax return.
Great content!!! Thank you for sharing such useful information. I have a question about the RRSP HBP. I bought my first home last year but I didn’t have made any RRSP contribution. But now I do have some money in my RRSP. In this case, can I use the HBP program to make an extra payment against my current mortgage?
Hey Juvenal - I actually don't know the answer to that one. Could be worth a chat with your bank as I imagine they've had that request before. Sorry I couldn't help more! Paul
Hi Nick - great question. In this context, we mean high or low for marginal tax rates and those would be on a sliding scale. The highest being above $220K per year (which pays 53.5% in BC) and lowest being effectively zero tax if you make $15,000 or less. Probably would have been better to have said higher or lower income in this context. If you search up marginal tax rates for your province, you can see that the higher your marginal tax rate, the more you save with RRSP. Hope this helps!
