When should I withdraw - HBP ?

[Seesus]

I am closing my first home (condo) in May.2013 and had a few questions below regarding the HBP withdrawal as i would be taking advantage of that.

1. At what time should i withdraw the funds from RRSP - this year or next year ?
2. What documentation do i need for the bank in order to withdraw the money
3. Part of my RRSP is locked by the employer, What do i need to pull funds from there
4. I would also pull an additional 4K in addition to the 25K (HBP) from RRSP due to some $$$ issues on my end, would it be advisable to do it at the same time while withdrawing for HBP ?

Thanks in advance.

 

[Eug]

When should I withdraw - HBP ?

Several months ago, when the market was at its peak.

What I did was to gradually pull it out over the course of a year, to ensure I'd have the actual cash, instead of a much less due to a market crash. This actually happened to a colleague of mine who was buying a property (not using RRSP funds, but other investment funds). The market had a big pullback in the few days before my colleague needed to cash out for the closing.

http://www.cbc.ca/news/business/story/2007/07/24/marketsdecline.html
http://www.thestar.com/Business/article/240378

 

[cdr108]

Several months ago, when the market was at its peak.

What I did was to gradually pull it out over the course of a year, to ensure I'd have the actual cash, instead of a much less due to a market crash. This actually happened to a colleague of mine who was buying a property (not using RRSP funds, but other investment funds). The market had a big pullback in the few days before my colleague needed to cash out for the closing.

http://www.cbc.ca/news/business/story/2007/07/24/marketsdecline.html
http://www.thestar.com/Business/article/240378

redemption of securities and withdrawals are 2 separate transactions.
similarly, contributing to rrsp's doesn't mean you have to immediately decide to buy something.

OP, here is info from CRA:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

 

[marsh]

I don't think you can withdraw funds from a locked-in RRSP as the CRA website says, but you should confirm with your employer.

Also, if you withdraw excess funds from your RRSP outside of the HBP program, tax will be withheld at source by the financial institution. (I think its a flat rate (some how 30% sticks in my mind but I'm not positive - the finanical institution holding your RRSP will know). You also don't get back the RRSP room, e.g. if you withdraw $4,000 from your RRSP you don't get credited back $4,000 of RRSP room to relfect the withdrawal - its gone forever as well the lost potential sheltered growth (which can be substantial over a 10 - 20 - 30 year time horizon). So think carefully about withdrawing RRSP funds (outside of the HBP program) -financial advisors generally don't advise early RRSP withdrawals. CRA website also has excellent information on RRSPs.

As for timing - i think it comes down to when you need the money. If your closing isn't until 2013 I'm not sure why you would do an HBP withdrawal now if the money is only needed on closing. Also, new condos are notorious for delays - is this a "firm" closing?
Check with your financial institution holding your RRSP to find out how long it takes to process an HBP withdrawal, I did this but its been a few years, but I don't remember it taking a long time - maybe a week or so.

If you are worried about market flucations - maybe look at changing a portion of your investment in your RRSP earmarked for your down payment to something less risky then equities. Talk to a financial advisor.

 

[Eug]

redemption of securities and withdrawals are 2 separate transactions.

True, but you know what I mean, which is not to leave everything invested in equities until 2 weeks before the closing.