I'd like to move my self-directed RRSP account from one institution to another. My current broker charges the common $125 for transfer out using the T2033.
To avoid this fee, I'm considering liquidating the assets, closing the account (which is free), and having the money essentially withdrawn from the RRSP. Subsequently, I'd deposit the proceeds into the new account. This method would trigger a withholding tax as well as a T4RSP from my current broker. I'm nowhere near retirement and the amount that I'm talking about is less than $5000. At tax time, I'd be able to negate the effects of the additional income from the RRSP withdrawal with a deduction from the new RRSP deposit.
Is my understanding correct? Are there any other penalties or fees associated with early withdrawal from RRSP? Thanks.