A sworn declaration or affidavit of RRSP withdrawal application: Individuals may need to withdraw funds from their RRSP before retirement. This process involves a formal application, and in some cases, the application may require the individual to sign a sworn declaration or affidavit. In this article, we will explore the RRSP withdrawal process and the significance of a sworn declaration or affidavit in this context.


What is an RRSP Withdrawal Application?

An RRSP Withdrawal Application refers to the process of taking money out of a Registered Retirement Savings Plan (RRSP) in Canada. RRSPs are tax-advantaged savings accounts designed to help individuals save for their retirement. They offer tax benefits when you contribute to them, but there are rules and tax implications when you withdraw funds from them before or during retirement.

When can you apply for an RRSP withdrawal?

You can apply for an RRSP withdrawal at any time, but the timing and the tax implications depend on the type of withdrawal you’re making. There are two primary types of RRSP withdrawals:


Regular Withdrawals: You can make regular withdrawals from your RRSP at any time, but the amount you withdraw will be subject to withholding tax. The financial institution holding your RRSP will deduct a percentage of the withdrawal amount and remit it to the government as an advance tax payment. The withholding tax rates vary depending on the amount you withdraw:


  • Up to $5,000: 10%
  • $5,001 to $15,000: 20%
  • Over $15,000: 30%


When you file your income tax return for the year, the actual tax owing on the withdrawal will be calculated, and you may receive a refund if you’ve overpaid or owe more if the withholding tax didn’t cover your tax liability.


Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP): These are specific programs that allow you to withdraw funds from your RRSP for the purchase of a home (HBP) or to finance education (LLP). These withdrawals have specific rules and repayment requirements.


However, the government of Canada imposes certain rules and regulations regarding the withdrawal of funds from RRSPs to ensure that they are primarily used for retirement savings. When you want to take money out of your RRSP before you retire, you typically need to complete an RRSP Withdrawal Application. The specific form and process may vary depending on your financial institution or the financial service provider that manages your RRSP.


What is an Affidavit and How Do I Notarize it?

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Are there any restrictions on RRSP withdrawals?

Yes, there are some important restrictions and considerations:


Tax Implications: RRSP withdrawals are considered taxable income. You’ll have to report the withdrawal on your income tax return, and it will be added to your total income for the year. Depending on your total income, you may owe additional taxes.


Early Withdrawal Penalty: If you withdraw funds from your RRSP before retirement, you may face penalties in addition to the withholding tax. The amount withdrawn will permanently lose its tax-deferred status, meaning you won’t be able to recontribute it in the future.


Repayment Plans (HBP and LLP): If you use the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP), you must repay the withdrawn amount to your RRSP over a specified period to avoid tax penalties.


Minimum Withdrawals: Starting at age 71, you must begin making minimum annual withdrawals from your RRSP, known as Required Minimum Withdrawals (RMWs). These are mandatory and subject to tax.

How do I apply for an RRSP withdrawal?

To apply for an RRSP withdrawal, you typically need to follow these steps:


Contact Your Financial Institution: Get in touch with the financial institution where your RRSP is held. They will provide you with the necessary forms and guidance on the withdrawal process.


Complete the Withdrawal Application: Fill out the withdrawal application form, specifying the type of withdrawal you’re making (e.g., regular withdrawal, HBP, LLP).


Sworn Declaration or Affidavit: In some cases, the RRSP withdrawal application may require the individual to sign a sworn declaration or affidavit.


Submit the Application: Send the completed application form to your financial institution along with proof of your identity. You will likely need to provide proof of your identity, such as a copy of your driver’s license, passport, or another government-issued photo ID. Your financial institution will process the request and make the necessary deductions, including withholding tax if applicable.


Spousal Consent Requirement: If you are married or in a common-law relationship, your spouse or common-law partner may need to provide their consent. The consent form is usually provided by your financial institution.


Receive Funds: Once your application is processed, you will receive the funds, either through a check, electronic transfer, or another method specified by your financial institution.


Keep Records: It’s essential to keep records of your RRSP withdrawals and tax documents for your income tax return.

How to withdraw money from an RRSP without paying tax?

Withdrawing money from a Registered Retirement Savings Plan (RRSP) without paying tax can be a bit tricky, as RRSPs are designed to be tax-deferred savings accounts for retirement. Generally, if you withdraw money from your RRSP before retirement, it will be subject to taxation. However, there are a few exceptions and strategies you can use to minimize the tax impact:


Home Buyers’ Plan (HBP):

Under the Home Buyers’ Plan, you can withdraw up to $35,000 from your RRSP to buy or build a qualifying home.

You have to repay this amount to your RRSP within 15 years, or it will be considered taxable income.


Lifelong Learning Plan (LLP):

The Lifelong Learning Plan allows you to withdraw up to $10,000 per year from your RRSP to finance full-time training or education for you or your spouse.

You also have to repay these amounts within 10 years.


Retirement or Spousal RRSP:

  • If you have a Spousal RRSP, you can withdraw funds from it without tax implications after a three-year waiting period. This can be advantageous for income splitting in retirement.
  • When you withdraw from a regular RRSP, it’s taxable as income. However, when you retire, you may be in a lower tax bracket, reducing the tax impact.


What is the difference between Sworn Declaration and Affidavit?

Both sworn declarations and affidavits serve as legal documents in which the applicant makes a solemn statement or declaration. However, there are subtle differences between the two:


Sworn Declaration: This is a written statement made by the applicant, usually in the presence of a commissioner of oaths, a notary public, or a lawyer. By signing a sworn declaration, the individual affirms that the information provided in the RRSP withdrawal application is true to the best of their knowledge and belief.


Affidavit: An affidavit is a more formal legal document. It is also a written statement, but it is typically made under oath or affirmation in front of a commissioner for oaths or a notary public. When an individual signs an affidavit, they are making a legally binding promise that the information in the RRSP withdrawal application is true, and they can be held accountable for any false statements.

What is the Significance of a Sworn Declaration or Affidavit in RRSP Withdrawal Applications?

The inclusion of a sworn declaration or affidavit in the RRSP withdrawal application process serves several important purposes:


Legal Accountability: By requiring individuals to make a solemn declaration or affidavit, the government ensures that the information provided is accurate and truthful. This helps maintain the integrity of the RRSP program.


Prevention of Fraud: Requiring a sworn declaration or affidavit discourages fraudulent activities, such as attempting to withdraw RRSP funds for purposes not allowed by the CRA.


Documentation: These legal documents provide a clear record of the applicant’s commitment to the accuracy of the information provided, which can be crucial in case of any disputes or audits.


Protection for Financial Institutions: Financial institutions administering RRSPs have a responsibility to ensure that withdrawals are made in accordance with the law. The inclusion of a sworn declaration or affidavit helps protect these institutions from inadvertently facilitating improper withdrawals.

In conclusion, the RRSP withdrawal application process is a carefully regulated procedure designed to ensure that individuals meet the necessary criteria for withdrawing funds from their RRSPs. The requirement for a sworn declaration or affidavit adds an extra layer of legal accountability and integrity to this process, safeguarding both the individuals and the RRSP program as a whole. It underscores the importance of honesty and accuracy in all dealings related to RRSPs, contributing to the long-term financial security of Canadians.

How All-Canada Notary can help?

If you are looking for a Notary Public to notarize or commission your RRSP Withdrawal Application, contact our All-Canada Notary. You need to complete the form prior to signing it in front of the notary/commissioner. All-Canada Notary is a network of notaries public. You can visit our locations for in-person notarial services or use our virtual/online notary.