RRSP withdrawal to pay off LOC debt

[You Need a Thneed]

Due to 5 months unemployment, I’ve racked up debt on my line of credit. I plan to withdrawn from RRSP to pay this off. Is there any reason to wait to withdraw until 2021 tax year?

Even though I was unemployed for a good chunk of the year, I did get a sizeable bonus, as well as a severance, and had high percentage tax rates taken off of each.

If I do withdraw now, I can probably recover any over tax deduction in a few months, instead of early 2022.

Anything I should know that could help me make a better decision?

[Locke]

I will give you the best answer I can.

This decision really revolves around the specifics. How much did you earn total, when, how much room do you have, timing, etc.

Fire me a PM or email and I can help you out because, yes, you ca take advantage of the timing right now.

[You Need a Thneed]

Thanks, sending PM.

[GGG]

Will you earn more or less next year and will it be in a different bracket?

The other consideration is that since you permanently lose the RRSP room it might be better just to pay the loan off over time depending on interest rates. If you can get a home equity backed Line of Credit you are likely better paying it off over time then by withdrawing as even if you have to cut RRSP contributions to do it you can carry over room.

Government will also withhold 30% on larger amounts.