Jamie, 45, is reviewing his registered portfolio. He has $20,000 in unused RRSP contribution room. He contributes $10,000 to his RRSP. The next year, he withdraws $5,000 from his RRSP to cover an unexpected expense. How does this withdrawal impact his RRSP contribution room for future years?

Question: Jamie, 45, is reviewing his registered portfolio. He has $20,000 in unused RRSP contribution room. He contributes $10,000 to his RRSP. The next year, he withdraws $5,000 from his RRSP to cover an unexpected expense. How does this withdrawal impact his RRSP contribution room for future years?

Answer options:

• His RRSP contribution room will increase by $5,000 in the following year. ✅ The withdrawal has no direct impact on his RRSP contribution room; it is simply added to his taxable income.
• His RRSP contribution room will decrease by $5,000 permanently.
• He will be able to re-contribute the $5,000 within the same tax year without affecting his room.

Correct answer: The withdrawal has no direct impact on his RRSP contribution room; it is simply added to his taxable income.

Explanation: Unlike a TFSA, RRSP withdrawals do not restore contribution room. The withdrawn amount is fully taxable in the year of withdrawal and does not create new contribution room.