US Resident Cashing Out RRSP

RRSP for Americans

I have helped hundreds of people successfully navigate from the US to Canada. If you're thinking of moving or retiring to Canada contact me today to chat about your plans.

I can be reached via email at, by phone at 250-661-9417 or through my contact page here.

I look forward to speaking to you soon.

Phil Hogan, CPA, CA, CPA (CO)
Cross-Border Tax and Investment Specialist


Hello Phil, I found your commentary very helpful as I have been considering cashing out my RRSP and reinvesting in the US:

I am Canadian living in the US and have been here along with my wife since XXXX. At the time we left our RRSP’s and let them grow as the markets grew. Of course we have not made any new investments. Reason for my note is I’ve tried to understand my options from XXXX contacting the branch where we opened them, their mutual fund center in North York and by going into their branch in Windsor (closest to us since we live outside of Detroit). Of course we cannot cross the border currently due to COVID so I have to try and get answers over the phone but its been very frustrating.

I’ve had a host of responses to my questions from “you’re not allowed to hold RRSP’s when you leave the country, consider them as any other investment” to being told tax withholding is anywhere from 15, 20, 25 and more percent. I have confirmed they are RRSP’s through the mutual fund center. My questions are the following;

1) Are there minimum age limit penalties for taking redemptions prior to a certain age?

2) Your note confirmed a 25% withholding, what would ultimately be my tax exposure, is this based on my US income tax bracket or the Canadian tax bracket?

3) Will I need to file a Canadian tax return

4) I assume taxes paid in one country become a foreign tax credit in the other, can you confirm please?

5) Would this trigger a capital gain in the US

6) Have I forgotten anything?

Thanks very much in advance.




Thanks for the email. To properly advise on the RRSP and other cross-border matters we would need to arrange a paid consultation, however I should be able to give you some guidance below with respect to your questions:

  1. RRSPs don’t have penalties like US IRAs. Any withdrawal however would be subject to Canadian withholding tax
  2. If you pull money from the RRSP (unless it’s converted to a RRIF when you’re over 70) the bank will withhold 25% Canadian tax
  3. No, if they withhold 25% tax you will not be required to file a Canadian tax return
    1. However you do have the option of filing a S.217 tax return if most of your income for that year will be RRSP withdrawals
  4. Yes, you will also report the RRSP distribution in the US and take an offsetting tax credit on form 1116 for the 25% foreign tax withheld
  5. Although the full RRSP withdrawal would be taxable both in Canada and the US, no capital gains would result on the distribution

If you would like to arrange a paid consultation please let me know and I can send out some details.




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