A lot of people — people who are clearly not as tuned in as you are — think that when you withdraw from your Registered Retirement Savings Plan (RRSP), you pay a withholding tax “penalty.” But you, wise reader, know (or now know) that’s not the case. In fact, the money you’re charged when you make that withdrawal is just part of what you owe in taxes, since anytime you withdraw from your RRSP, you’re going to owe taxes. The “fee” in question? Think of it more like a partial down payment toward the total amount of tax you will owe the government on the withdrawal when tax time comes around in April
