# RRSP contribution limit question



## amitdi (May 31, 2012)

My contribution limit is $16000 and I want to contribute $15000 now. I also have a pension plan which will be around $1500 per year contribution from me and same from my company.

Is pension contribution done this year considered part of the $16000? or will that only be considered for calculating next year's limit.


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## GoldStone (Mar 6, 2011)

Pension contributions reduce next year's limit.

Your company will report the pension contributions on your T4 (lines 20 and 52). You will copy the numbers to your tax return (lines 207 and 206). Your next Notice of Assessment will report the reduced RRSP room.


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## Eclectic12 (Oct 20, 2010)

^^^

+1 ... though techincally, the T4 form usually is marked as boxes 20 and box 52.

To provide a little more detail, box 20 will list the contributions made and box 52 will list the Pension Adjustment (the PA is the part that does the reducing of the earned RRSP contribution room that is made available the following tax year).

On the tax return, line 206 records the PA so that CRA's calculation of the RRSP contribution room for the following year will take it into account. Line 207 is a deduction from income so that reduces one's net income.

Behind the scenes, the employer knows that this is an RPP contribution so they usually don't include this amount in the income that income tax is deducted from (this means one gets the refund during the year by paying less income tax versus making an RRSP contribution).


Cheers


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## CanadianCapitalist (Mar 31, 2009)

It sounds to me OP really has a Group RRSP, not a pension plan. If it's a Group RRSP, then total contributions in all RRSPs should not exceed contribution limit.


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## Guban (Jul 5, 2011)

If it really is a group RRSP, the OP could still make the full $15000 contribution, but just not deduct beyond his/her contribution limit. The rest would just be an overcontribution, and would be deducted in the future. This could be a good strategy to defer taxation, and assumes that the TFSA is already maxed out.


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## amitdi (May 31, 2012)

CanadianCapitalist said:


> It sounds to me OP really has a Group RRSP, not a pension plan. If it's a Group RRSP, then total contributions in all RRSPs should not exceed contribution limit.


Thanks for the replies. In short, I need to only worry about my "RRSP" contributions against the contributions limit and not worry about the pension deductions done this year. Thanks.

P.S: I have a pension plan with a company contribution (2+2=4% of my salary). Although there is one, I do not contribute to the company's Group RRSP.


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## Eclectic12 (Oct 20, 2010)

amitdi said:


> Thanks for the replies.
> 
> In short, I need to only worry about my "RRSP" contributions against the contributions limit and not worry about the pension deductions done this year ...


That is my understanding as well.




amitdi said:


> ... P.S: I have a pension plan with a company contribution (2+2=4% of my salary).
> Although there is one, I do not contribute to the company's Group RRSP.


Is the pension a defined contribution (DC) plan or a defined benefit (DB) plan?

The mechanism as described about will be the same, the difference will be the size of the PA. In a DC pension, the PA is exact. So if your contributions plus the companies contribution are 4% of salary, the PA listed on the T4 form in box 52. Or if you prefer numbers, if you put in $2 and the employer puts in $2, the PA will be $4.

Since the DB pension is paid out by a formula where any shortfall has to be made up by the employer, the PA is much larger. So if you put in $2 and the employer puts in $2, the PA will be something around $16.


Cheers


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## amitdi (May 31, 2012)

Eclectic12 said:


> That is my understanding as well.
> 
> 
> 
> ...


Its a DC. So I can even calculate fairly accurately what my next year's (and subsequent years) limit will be. Cool and thanks for this as well.


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