# Past Service Pension Adjustment + No RRSP room



## Sampson (Apr 3, 2009)

There will be a change in my employment/benefits which I believe triggers a Past Service Event. We have been retroactively awarded (by the court) pensionable time/money and I would like for that amount plus my personal matching amount to be deposited into our RPP so I can gain back the 2 years of pensionable service. I will not have any RRSP room (this was from 7 and 8 years ago), so I am trying to understand what this will happen.

As I understand, my employer will file a Past Service Pension Adjustment, but I do not know if this gets applied to my present status or my income tax status of 2007 and 2008. My understanding is there are several ways to deal with the fact I have no RRSP room, (1) transfer RRSP funds to the RPP, (2) withdrawal RRSP funds (Form T1006), (3) buy back only as much service as RRSP +$8000.

I don't really understand option (3). Does this mean I can take some advantage of slightly higher contribution amount (more than 18%, since my RRSP room is maxed, then I can add $8k to the RPP?).

Also, is the PSPA applied to my 2007 and 2008 RRSP contribution amounts, or will any present RRSP room be eligible to as 'trade'. I have a tiny amount now, but since it seems there is 90 days to transfer/withdrawal, then my next years RRSP amount might give me more breathing room also.


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## NorthernRaven (Aug 4, 2010)

Just kibitzing, as I haven't done a PSPA myself, but I believe #3 means that you can only buy as much of the PSPA as you have *current* RRSP contribution room. But you can go negative $8000 for this PSPA purpose, so if you have $1000 of room you could buy $9000 of the PSPA. It sounds like you would definitely want to look into having the transaction date be in 2016, so you could apply it to the next tax year and the additional room that would be available then.

Here's an example of a PSPA which may provide some context.


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## Sampson (Apr 3, 2009)

NorthernRaven said:


> But you can go negative $8000 for this PSPA purpose, so if you have $1000 of room you could buy $9000 of the PSPA. It sounds like you would definitely want to look into having the transaction date be in 2016, so you could apply it to the next tax year and the additional room that would be available then.


Thanks for the link.

Going negative definitely would be a 'positive' for me. Unfortunately I have no control over the timeline. It is not a standard buyback per se, since it was a result of a lawsuit. They will collect all the instruction some time in November, then presumably the employer will have to file the actual Pension adjustment, and hopefully by the time CRA receives the details, 2016 rolls around.

Originally I was worried that a penalty might be incurred due to over contribution, but it seems even the other options (removing funds from RRSP) can correct this. When they calculate how much RRSP was be reduced, is the a COLA applied? In addition to going negative $8000, it seems if I have to remove present value for benefit originally due in 2007, this is also in my favor (slightly).


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