# RRSP: Pension adjustment



## jamesbe (May 8, 2010)

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?


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## jamesbe (May 8, 2010)

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.


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## Four Pillars (Apr 5, 2009)

jamesbe said:


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


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.


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## jamesbe (May 8, 2010)

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.


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## cardhu (May 26, 2009)

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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