Can I withdraw income trust distributions out of my RRSP?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 4 February, 2005 | 2:00PM
Dear Expert:

I am considering investing in income trusts under my RRSP account. Can I withdraw the monthly income they provide in cash out of my RRSP account, or must the monthly income be re-invested at the prevailing income trust unit price?

Expert Answer:

You certainly may withdraw the monthly income out of your RRSP account; however, it will be fully taxable to you as an RRSP withdrawal at your marginal tax rate. Unless you need the funds, it's best to allow the monthly income trust distributions received to remain in your RRSP until you need the cash (perhaps upon retirement).

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Jamie Golombek

Jamie Golombek