One of most common questions I hear every year about RRSP’s is how much can be contributed to an RRSP? The rules may seem complicated, but for most Canadians, it’s pretty straight forward.
If you filed an income tax return last year, you would have received a Notice of Assessment from the CRA and your RRSP contribution limit is reported on the Notice of Assessment. For example, the amount you can contribute to your RRSP in 2009 would be reported on your 2008 Notice of Assessment.
How Is The RRSP Contribution Limit Calculated?
The amount you can contribute to your RRSP is determined by your earned income last year and the maximum RRSP limit. Some adjustments are made if you were a member of a pension plan or other type of employee sponsored retirement plans.
The maximum amount you can contribute to your RRSP and subsequently deduct on your income tax return in any given year is limited by your RRSP deduction limit. The RRSP deduction limit may also be referred to as contribution room or deduction room.
The RRSP deduction limit is calculated by:
- Taking the lesser of 18% of your previous years earned income from the immediately preceding year or the RRSP Dollar Limit for the year,
- LESS: The your previous year’s pension adjustment (PA) reported on your T4 if you were a participant of your company’s deferred profit sharing program (DPSP) or registered pension plan (RPP),
- PLUS: Unused deduction room carried forward from prior years,*
- PLUS: Pension adjustment reversal from past years, and
- LESS: Net past service pension adjustment (Net PSPA).
* If you deducted less than the maximum, the unused RRSP contribution room is carried forward and can be used in later years.
The RRSP dollar limit is reported annually by the CRA. See the Rates & Tools page for the most recent RRSP Dollar Limit.
Are There Age Limits?
As long as you had earned income in the last tax year, you can contribute to an RRSP up to and including the year in which you turn age 71. Your contributions can be to your own RRSP or to your spouses’ RRSP. See What is a Spousal RRSP?
Question About RRSP’s?
Do you have a question about your RRSP or about RRSP contributions or deductions? Please feel free to ask your question in the comment box.
{ 16 comments… read them below or add one }
My daughter is a stay home mom but still contributes to a RRSP. 2008 year she had no income other than Universal child credit but contributed 900.00 which we did not claim. She has another 900.00 for 2009. She cahsed in some of her RRSP money due to necessity. Can she claim her RRSP’s for 08 and 09 this tax return. Thanks
@Sheila: She can carry forward her contributions and use them in future years as deductions. If her income is low only for the period of time she will be raising children, then she should continue to contribute to her RRSP. However, if her income will be low for a longer period of time, the TFSA would be a better choice because the RRSP contribution is not useful (she can’t really use the deductions).
I had no income in 2009, but I need to make a RRSP HBP repayment. Can I still make that payment? It seems like my tax software isn’t liking that.
Thanks
@Kevin,
You should be able to make a contribution in 2009 for the purposes of re-paying under the HBP. I’m not sure why your tax software will not allow it because, your 2009 RRSP room is based on your 2008 income. Perhaps you misentered your RRSP carry forward room.
Correct me if I’m wrong (with supporting link to CRA
, but isn’t the 2010 RRSP contribution the lesser of 20% of your 2009 gross or 22,000 $CAD ?
For 2010, the limit is the lesser of 18% of your prior year’s earned income (this has not changed) to a maximum of $22,000. The rate has never been 20%.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html and look at the link on that page http://www.cra-arc.gc.ca/E/pub/tg/t4040/README.html which gives a chart to calculate your limit yourself..
I have been a non-resident for the past six years and am returning to Canada in 2010. How can I find out my RRSP deduction limit for 2010?
Your RRSP deduction limit will be reported on your last notice of assessment. You can contact the CRA to obtain the number.
My2009 tax return info. was misplaced or lost and I need my RRSP deductions limit before I can send in my 2010 income tax return . Can you suggest another way to obtain this info. so that I can file my tax return on time?
Hello Aeneas Mac Isaac:
Call the CRA! They have it.
Hi:
I recently found two rrsp receipts for first 60 days of 2008. I’ve been contributing and using my allotted room every year but have not filed my 2009 rtn yet…
So what do I do with these receipts? Is there a limit of RRSP you can buy based on your room or can you buy more then you can claim and then claim later?
Can I claim the 1st 60 days of 2008 in my 2009 return and save newer receipts (1st 60 days of 2010) for my 2010 return instead of my 2009 return?
Hello Reh:
First of all, it is important to understand that the difference between the contribution limit and an RRSP deduction.
The contribution limit is the amount you can put in an RRSP during a tax year. For example, in 2009, you can contribute up to 18% of your 2008 earned income or $21,000 (which ever is less).
For your RRSP deduction, you may deduct contributions may in the tax year or 60 days in the year following. However, you are not required to deduct anything. Any contributions not deducted can be carried forward.
For 2009, you can deduct your contributions made from March 2009 forward through the end of February 2010. You should also be able to deduct the amounts from the 2 slips.
dear sir, if my wife has rrsp room of 50,000 can i pay this thro my stock acct. i want her to get the benefit of that room. not a spousal rrsp. thanks theo
Theo,
If you contribute the stock to your wife’s RRSP, it will affect your RRSP contribution and deduction room.
If an individual knowingly exceeds their RRSP limit by putting the eligible amount of a retiring allowance in their RRSP, the implications affect the employee only, not the employer correct?
Thank you!
Hi Jane,
Yes. There is a 1% penalty tax per month for amount that exceed your limit. Administratively the CRA applies the tax when the overcontribution exceeds $2,000.