I want to put some amount in RRSP which will give me a tax benefit.
Next year my income will not be enough so I am planning to withdraw it next year.

I just want to know if it is a good idea to put as much money as I can in RRSP this year and then withdraw in next year to get the maximum tax benefit this year. I don't see any other good alternative which can save that much tax in a year. I calculated that if I put $10000 in RRSP, it can save me a $3000 as tax benefit based on my current tax deductions.

Thanks

I hate RRSP. It's like your hard earn $s going one way, away from you. You invest it and it's gone for almost ever, well till your retirement.
Your suggestion sounds perfect to me. Invest 10K under RRSP, get 3K refund, next year withdraw the same 10K (less bank fees) and with no additional income, you will be under minimum income with almost no tax.

Ok, now back to the real purpose of RRSP.
Keep in mind, RRSP is not for this year's benefit or next year's benefit. It is for your post retirement life. It will be your income source when you will not or could not work.

I would not recommend withdrawing RRSPs unless and until you have no other option left for paying your bills.

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Originally posted by sville

I hate RRSP. It's like your hard earn $s going one way, away from you. You invest it and it's gone for almost ever, well till your retirement.
Your suggestion sounds perfect to me. Invest 10K under RRSP, get 3K refund, next year withdraw the same 10K (less bank fees) and with no additional income, you will be under minimum income with almost no tax.

Ok, now back to the real purpose of RRSP.
Keep in mind, RRSP is not for this year's benefit or next year's benefit. It is for your post retirement life. It will be your income source when you will not or could not work.

I would not recommend withdrawing RRSPs unless and until you have no other option left for paying your bills.

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I don't think there is any binding from the RRSP point of view but it would really depend upon where would you invest the money. Short-term/Flexible GICs would be fine (or the mutual funds, though obv principal amount is not secured in that case)

And ofcourse, the amount would be deducted from your contribution limit and wouldn't be added back even if you withdraw it next year.

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Originally posted by MeagainMe

I don't think there is any binding from the RRSP point of view but it would really depend upon where would you invest the money. Short-term/Flexible GICs would be fine (or the mutual funds, though obv principal amount is not secured in that case)

And ofcourse, the amount would be deducted from your contribution limit and wouldn't be added back even if you withdraw it next year.

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There is no bank fee but bank withhold tax when u withdraw money.there are exceptions if you want to withdraw money for buying home or learning.
if you with draw money from RRSP for anything else ..then theses are tax rates in Ontario.


up to $5000- bank holds 10 %
up to 10,000 , bank holds 20%
and more than $15000 bank holds 30 %.


When you will file your tax you will report withdraw amount as income and also report what bank has hold as a tax.


there are different types of RRSP ... its up to you to choose cashable rrsp or lock in RRSP... if you choose lock in RRSP then you can not take out money until u get retire.

Thanks.

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Originally posted by kumar_v
But my question is still there. What will be the harm if I put $10K this year and withdraw the same amount next year. Since my income will be less in next year.
If I don't invest in RRSP this year, I will be losing $3K anyway. Is there any binding that I cannot withdraw the amount from RRSP? In my scenario, is there any drawback?

Please suggest.

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