Q&A: Direct transfers from RRSPs

Question: Is it true that some institutions allow you to transfer assets directly from an RRSP to a non-registered investment account, saving you from having to liquidate investments when markets may not be favourable? – M.M.

Gordon Pape answers: Yes, that is correct. There are two ways to do this. One is to swap a security inside an RRSP (say a stock) for one of equal value (or cash) from outside the plan. As long as the values are the same going in and coming out, there are no tax implications to doing this.

The other is to withdraw the asset from the RRSP directly, without selling it first. In this case, the withdrawal will be treated as taxable income based on the value of the security at the time. So if you withdrew stock with a market value of $5,000 from your RRSP, you would have to declare that amount as income on your next tax return.