- Unused contribution room
Suppose you have not contributed the maximum amount to your RRSP in previous years. In that case, you may have unused contribution room that you can carry forward, increasing the amount you are allowed to contribute. . Each year, the Canada Revenue Agency (CRA) calculates it for you. Just look at the notice of assessment she sent you last year after processing your tax return to find the amount of your unused contribution room. This is taken into account in calculating your RRSP deduction limit for the current year.
Are you opening an RRSP for the first time? Here’s what you need to know.
Four things you might not know about your RRSP
Should I borrow to contribute to my RRSP?
- Contributions to a pension plan
If you participate in your employer’s pension plan, you must subtract your “pension adjustment” (PA) from the RRSP deduction limit. The CRA does this calculation is done for you by the CRA and is shown on your Notice of Assessment. You don’t have to worry about this the first year of membership in a pension plan because your PA for one year reduces your RRSP contribution limit for the following year.
Group RRSPs: why you should jump at the chance
Three clever ways to increase your RRSP contributions
- RRSP Excess Contributions
The CRA allows overcontributions to remain in the RRSP if they do not exceed $2,000. Any amount over this $2,000 is subject to a penalty tax of 1% per month. (However, if you immediately withdraw these overcontributions and send a letter to the CRA explaining that it was a legitimate error, you may be granted a tax exemption on the excess contributions.)
RRSP or TFSA excess contributions: how to correct the situation
RRSP: the five most common mistakes and how to avoid them
There is no doubt that an RRSP is one of the best ways to save for your retirement. But don’t forget that everything has a limit, including your RRSP.
Are you saving enough for the future? Use this RRSP calculator to find out.
