RRSP/RRIF Withdrawal Tax for US Residents (Treaty)
Canada withholds tax when a US resident draws down a Canadian RRSP or RRIF. Compare the 25% rate on a lump-sum or non-periodic payment against the 15% Canada-US treaty cap on periodic RRIF payments, and run the CRA periodic-payment test that decides which rate you get.
Canadian withholding as your annual RRIF payments grow
Periodic RRIF payments are withheld at 15% up to the CRA threshold and at 25% only on the part above it, so the treaty saving stops growing at the threshold but is never lost.
What you keep vs what Canada withholds
Your payment split into what you receive, the part withheld at 15% and the part withheld at 25%, as a lump sum and as periodic payments.
Periodic-payment test
The CRA test that decides whether your RRIF payment gets the 15% treaty cap or the 25% default.
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How much you can take at 15%, by age
The 15% threshold as a percent of the fund's January-1 value: 10% through age 70, then twice the RRIF minimum, reaching 40% at 95. Each year's dollar threshold depends on that year's January-1 value.
How this is calculated
1. Default rate: 25% (Part XIII)
Any RRSP or RRIF amount paid to a non-resident is subject to 25% Canadian non-resident withholding tax under the Income Tax Act s.212(1). This is the starting point for every payment. Source: Income Tax Act (Canada) s.212(1).
2. Treaty cap: 15% on periodic pensions
Article XVIII(2)(a) of the Canada-US tax treaty limits Canadian tax on a periodic pension payment to a US resident to 15% of the gross amount. This reduces the 25% domestic rate but only for qualifying periodic payments. Source: Canada-US Tax Convention, Article XVIII, confirmed by IRS Publication 597.
3. Lump sums get no reduction
Lump-sum RRSP collapses and non-periodic payments are excluded from the definition of "periodic pension payment," so they stay at 25%. Source: Income Tax Conventions Interpretation Act s.5.
4. The CRA periodic-payment test
RRIF payments count as periodic (and get 15%) up to a yearly threshold, measured against the total payments in the calendar year: the greater of (a) 2 × the RRIF minimum amount for the year, and (b) 10% of the fund's fair market value at January 1. Payments up to that threshold get 15%; draw more and only the part above the threshold is withheld at 25%, not the whole payment: withholding = 15% × min(payments, threshold) + 25% × max(0, payments − threshold). On $40,000 with a $32,400 threshold that is $4,860 + $1,900 = $6,760 (16.9%), not $10,000. Source: ITCIA s.5, CRA External T.I. 9333995 & 9526965.
5. The RRIF minimum amount
Under 71: minimum = January-1 value ÷ (90 − age at Jan 1). Age 71+: minimum = January-1 value × the prescribed factor (5.28% at 71, 5.40% at 72, rising to 20% at 95+). Source: CRA "Minimum amount from a RRIF", Income Tax Regulations s.7308.
6. The US side (not modelled in the dollars)
The distribution is also taxable on your US return as ordinary income, though a US person generally has cost basis equal to non-deductible contributions, so only the growth is taxed there. The Canadian tax withheld is generally creditable against US tax as a foreign tax credit (Form 1116, treaty Article XXIV). Rev. Proc. 2014-55 governs the US treaty deferral and ended the old Form 8891 filing. Source: IRS Publication 597.
7. Reading the charts
Withholding as your payments grow runs the same calculation at evenly spaced annual RRIF payment totals, from $0 to a round amount past 1.5 times your threshold and past your own payment. The top line is 25% × payments (a lump sum, or any RRSP withdrawal); the lower line is the periodic formula above, and the shaded span past your threshold is where each extra dollar is withheld at 25%. The band between the lines is the treaty saving, 10% × min(payments, threshold): it widens until your payments reach the threshold and then keeps the same width, so going over costs you 25% on the excess but never takes back the saving on the first part. At your own payment the lines and the band match the metric cards.
What you keep splits your payment into the amount you receive, the part withheld at 15% (payments within the threshold) and the part withheld at 25% (a lump sum, an RRSP withdrawal, or periodic payments over the threshold). The outlined bar is the option you picked.
How much you can take at 15%, by age shows the threshold as a percent of each year's January-1 value: max(2 × minimum factor, 10%), next to the minimum factor itself. Before 71 the factor is 1 ÷ (90 − age), so twice it never beats 10% (they meet at 70); from 71 the prescribed factors make twice the minimum the larger limb, up to 40% at 95 and older. It is a rate, not a forecast: the dollar threshold in a later year depends on that year's January-1 value, which this page does not project.
What this does not model
Whether you qualify as a US resident / treaty beneficial owner or have a departure-tax issue; the exact US taxable portion (the return-of-basis split is fact-specific); your net US tax after the foreign tax credit or any FTC limitation; US state tax (several states ignore the treaty and tax RRSP/RRIF in full with no credit); the first-year-RRIF nil-minimum interaction with the test (a January-1 value of $0 gives a $0 threshold here, so every payment is shown at 25%); a RRIF minimum based on a younger spouse's age; a section 217 election (filing a Canadian return so these payments are taxed at graduated rates, which can refund part of the withholding); an NR7-R refund of over-withholding; and any currency/FX-timing or provincial effects. The minimum-factor table and the periodic-payment test are administrative positions. The payer or your advisor confirms the actual rate on your T4RIF / NR4.
Common questions
How much Canadian tax is withheld on an RRSP withdrawal for a US resident?
A lump-sum or non-periodic RRSP or RRIF payment to a non-resident is subject to 25% Canadian non-resident (Part XIII) withholding tax. Ordinary RRSP withdrawals do not qualify for any treaty reduction, so 25% applies. The Canada-US treaty only lowers the rate to 15% for payments that count as a periodic pension payment, which generally means a RRIF, not an RRSP.
When does the Canada-US treaty reduce RRIF withholding to 15%?
Article XVIII(2)(a) of the Canada-US treaty caps Canadian tax on a periodic pension payment at 15%. The CRA treats a RRIF payment as periodic up to the greater of (a) twice the RRIF minimum amount for the year, and (b) 10% of the fund's fair market value at January 1. If your annual payments exceed that threshold, only the portion above it is withheld at 25%. The amount up to the threshold still gets the 15% treaty cap, so the effective rate is a blend, not a flat 25% on the whole payment.
How is the RRIF minimum amount calculated?
For a RRIF holder under 71, the minimum amount is the January 1 fair market value divided by (90 minus the age at January 1). At age 71 and older, a prescribed factor table applies (for example 5.28% at 71, 5.40% at 72, rising to 20% at 95 and older). The minimum amount is that factor multiplied by the January 1 value.
Do US residents pay US tax on RRSP or RRIF withdrawals too?
Yes. The distribution is also taxable on the US return as ordinary income, though a US person generally has cost basis equal to non-deductible contributions, so only the growth portion is taxed on the US side. The Canadian tax withheld is generally creditable against US tax as a foreign tax credit (Form 1116). Some US states do not follow the treaty and tax the full amount with no credit, so confirm your situation with a cross-border tax professional.