RRSP contributions & pension adjustments
If you pay into an employer plan such as a pension, that might impact your limit. Your Notice of Assessment from the CRA will show you how your pension adjustment affects your RRSP contribution limit.
Here are some of the ways your employer plan can impact your RRSP limits:
Pension adjustments and your RRSP contribution limit: If you belong to a pension plan through your employer or union, the amount you can contribute to your RRSP is decreased.
If you have a defined benefit plan, the CRA will estimate the value of the benefit you earned over the course of the prior year.
If you have a defined contribution or deferred profit sharing plan, the adjustment is the total amount you and your employer contributed during the prior year.
Your Notice of Assessment from the CRA will show you how your pension adjustment affects your RRSP contribution limit.
Who can contribute to an RRSP?
You can contribute to an RRSP if you:
Have earned income
Have a social insurance number
Filed a tax return
Have RRSP contribution room available
Are under 71. The end of the year that you turn 71 is your last opportunity to contribute.
Figuring out how much to contribute to your RRSP is important. Do it right, and you maximize your tax savings now, while setting yourself up for a good income after retirement. Do it wrong, and you could find yourself paying more taxes than you have to.
Author: The Link Between