RRSP withdrawal withholding: a prepayment, not the final tax
The tax taken off an RRSP withdrawal is a prepayment. Enter the amount and both rates to see what lands in your account and what may still be due.
How it works: the payer keeps the withholding rate times the withdrawal and sends it to the tax office. You get the rest. That kept money is a prepayment on your tax. It is not the tax itself. Your real tax on the withdrawal depends on your own rate. If your rate is higher than the rate withheld, you owe the gap at filing time. If it is lower, you get the gap back. Both rates here are your own inputs.
The mix-up
Many people read the withholding as the tax bill. It is only the first payment. The bill is set when you file. A big withdrawal can land in a higher rate than the one the payer used. See RRSP options and TFSA vs RRSP for options.
Cash in hand is not cash to spend
The amount that lands in your account is the amount minus the withholding. If you plan a purchase with the full withdrawal, the number is short. The rules for each account are in the options rules by account.
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