RRSP lump sum withdrawal and OAS - NR5 necessary?

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Cutesy
Posts: 4
Joined: Sat Apr 01, 2023 7:12 pm

RRSP lump sum withdrawal and OAS - NR5 necessary?

Post by Cutesy »

Hello,

This year (2023) I took out half of my RRSP and since I'm low income, I'd like to request a reduction to the 25% withholding fee that was taken. I am filling out the NR5 for 2023, and 2024 other half, and future OAS and QPP distributions. But is the NR5 necessary? I guess I'm wondering if only the 217 is necessary for these two years? Because I think OAS and QPP are declared on US taxes?

I have lived/worked in the US for 30+ years, low-income here as well. And I lived in Canada for 12 years after the age of 18 so from what I've read here, it looks like I might be eligible for a small portion of OAS distribution. (12/40, correct?)

Also I got lost in a sea of links as to how to even fill out the tax form for next year...yes I'm planning ahead. The 217 is all I will need to declare so I hope it's a simple form...TurboTax Canada can't even tell me if 217 is listed on their simplest (free) software.

Thank you!
nelsona
Posts: 18415
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRSP lump sum withdrawal and OAS - NR5 necessary?

Post by nelsona »

OAS and CPP will not have any tax deducted, since it is only reported in US, so there is no need to file an NR5 for that income.

The money that was withheld for 2023 cannot be changed at this point. As you correctly concluded, by filing a 217 return, you may get some of that money back next spring.

If you intend to take out the rest of your RRSP next year, then an NR-5 should be filed and approved BEFORE taking out the money, so that withholding can be reduced. You will then have to file a 217 return to make any final adjustments to your Cdn tax for that year (2024).

Your OAS will be about 12/40ths of the normal OAS.

I might suggest that you collapse your RRSP before taking any CPP or OAS, as these incomes (although not taxed in Canada) will be considered in determine your RRSP tax. So, if you can, delay taking your CPP and OAS until 2025. But if you cannot wait, it is not that great a concern, so do what you feel comfortable with.

may I ask how much is left in your RRSP?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Cutesy
Posts: 4
Joined: Sat Apr 01, 2023 7:12 pm

Re: RRSP lump sum withdrawal and OAS - NR5 necessary?

Post by Cutesy »

There is about $30K Canadian dollars left in my RRSP.
And I assume QPP is the same as CPP, in regards to the rules?
I'm not sure I understand the point of the NR-5 if I have to fill out a 217 in either case...
nelsona
Posts: 18415
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRSP lump sum withdrawal and OAS - NR5 necessary?

Post by nelsona »

The purpose of the NR-5 is to reduce withholding, meaning you don't have to wait 12 months to get your maney bask, like you will have to this year.

The NR-5 could determine the payor only needs to withhold, say $5000 in tax instead of the $7500 they would normally withhold (25% of $30K)

Yes, QPP/CPP are treated the same.

Ypiu may wish to split your withdrawals to 15K in each of 2023 and 2024. Taking 30K will not give you much savings over the 25% normal tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Cutesy
Posts: 4
Joined: Sat Apr 01, 2023 7:12 pm

Re: RRSP lump sum withdrawal and OAS - NR5 necessary?

Post by Cutesy »

Thank you so much!
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