RRSP: Pension adjustment
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Thread: RRSP: Pension adjustment

  1. #1
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    RRSP: Pension adjustment

    Hi all,

    Just trying to get this straight to ensure I don't max out my allowable RRSP contribution room this year.

    In my letter from the CRA after filing my taxes it had a line for pension adjustment which brought my max allowable RRSP contribution for this year down about $5000.

    So this year my maximum allowable contribution is something like $30,000.

    Assuming I put $30,000 into my RRSP this year and my company offers a partial match of $5000. Will this put me over my limit or has this already been accounted for and will only affect my limit for 2012?


  2. #2
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    Okay found this:

    What is a Pension Adjustment?

    A pension adjustment or PA is an amount that reduces the RRSP deduction limit of persons who are in a company-sponsored registered pension plans. This is an attempt to equalize the various tax deferred savings programs in Canada and ensure that persons who participate in a company pension plan do not have the same level of RRSP contributions as those who do not.

    Thus, persons who are not in a pension plan do not have a pension adjustment. Those who participate in a registered pension plan or a deferred profit sharing plan have a pension adjustment reported for each year of participation on their T4 slip (Statement of Remuneration Paid). The pension adjustment reported in a calendar year reduces allowable contributions to an RRSP for the next calendar year.

    The PA is the amount contributed by an employee and/or employer to an employee account in a defined contribution pension plan or deferred profit sharing plan, or the deemed value of pension benefits accrued during the year in a defined benefit pension plan.



    So from what I understand my max of $30,000 is how much I can put in, not including my company DPSP amount.

  3. #3
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    Quote Originally Posted by jamesbe View Post
    Hi all,

    Just trying to get this straight to ensure I don't max out my allowable RRSP contribution room this year.

    In my letter from the CRA after filing my taxes it had a line for pension adjustment which brought my max allowable RRSP contribution for this year down about $5000.

    So this year my maximum allowable contribution is something like $30,000.

    Assuming I put $30,000 into my RRSP this year and my company offers a partial match of $5000. Will this put me over my limit or has this already been accounted for and will only affect my limit for 2012?
    Correct me if I'm wrong, but if the CRA letter says your max RRSP contribution room for 2011 is $5,000 - then you can only contribute $5,000.

    I was looking at my tax stuff yesterday and learned something fairly basic - I always thought that the RRSP contribution room number the CRA gives you is the "carry over" amount and you have to add 18% of your previous year's income to that amount to get the actual limit. I now realize that their number is both the carryover from previous year plus the earned amount from the previous year's income.
    Mike Holman
    Money Smarts Blog Investing and Personal Finance

  4. #4
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    Sorry for the confusion, I wrote "my max allowable RRSP contribution for this year down about $5000." Not "my max allowable RRSP contribution for this year down to about $5000."

    Sorry, that was pretty vague actually haha.

    My max is $30,803 or something like that this year. Or at least that is what the CRA form says.

    What I was confused about was if it was $30,803 of MY cash AND DPSP contribution of my employer. Or if it was say $25,000 of MY cash and $5000 from my employer.

    But it looks like it is the first.

  5. #5
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    If your plan was a Group RRSP, the employer’s current year contribution would be counted against your current year’s RRSP contribution limit.

    But with an RPP or DPSP, there is a one-year lag ... the PA affects the next year’s RRSP contribution limit, not the current year’s limit.

    You should be fine to contribute the full $30,803 (or whatever) ... but if you quit your job and join a new firm that offers a GRSP instead of a DPSP, then you could potentially face an overcontribution.


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