RRSP Over contribution | Page 2 | RRSPs and RRIFs | Discussion forum

HermanH said
I was speaking with a CRA agent specializing in the RRSP and found out that I can over-contribute $2000 without penalty.

Has anyone else heard about this allowance/grace?  

HermanH, just curious how you were able to get in contact with a CRA agent that specializes in RRSP's? Thanks

dommm said

HermanH, just curious how you were able to get in contact with a CRA agent that specializes in RRSP's? Thanks  

I was asking generic tax filing questions and had a question regarding my RRSP contribution limit. The agent said that he was the general line and could not answer my query, but he would transfer me to a department that handles registered programs. I believe that there is also a phone option available when you call and select from the buttons offered.

Have you confirmed the $10,572 transfer to RRSP means there's an overcontribution?

I'm no expert but I found a CRA page where it says "Generally, amounts you transfer directly to your RRSP do not affect your RRSP deduction limit" so I'm wondering if CRA has confirmed the $10,572 has resulted in an overcontribution to your RRSP or are you just assuming that?

Bill said
Have you confirmed the $10,572 transfer to RRSP means there's an overcontribution?

I'm no expert but I found a CRA page where it says "Generally, amounts you transfer directly to your RRSP do not affect your RRSP deduction limit" so I'm wondering if CRA has confirmed the $10,572 has resulted in an overcontribution to your RRSP or are you just assuming that?  

Bill, I was under the same understanding as you. Would you be able to find that CRA page? I have looked high & low but no luck so far. Thanks

There's no direct transfer of property from a RRIF to an RRSP. Instead, there is a contribution to an RRSP of an excess amount RRIF withdrawal. When done directly, there is a special offsetting RRSP contribution deduction.

See previous discussion RRIF transfers to an RRSP and the back of the T2030 form used:

How to report the amounts transferred

Transferor: The transferor does not withhold tax on amounts that are transferred using this form.

An RRSP issuer who is transferring the value of an RRSP annuity reports the value on a T4RSP slip for the year of the transfer.

A RRIF carrier who is transferring a RRIF amount reports the amount on a T4RIF slip for the year of the transfer.

Transferee: The RRSP issuer, RRIF carrier, SPP or PRPP administrator, or annuity issuer who is receiving the transfer, issues a receipt to the applicant.

Individual: The applicant attaches a copy of the T4RSP slip or T4RIF slip, as well as a copy of the receipt, to their income tax and benefit return for the year of the transfer. The applicant includes the amount shown on the T4RSP slip or T4RIF slip in taxable income at the line of the income tax and benefit return indicated on the back of the slip, and deducts the amount shown on the receipt from taxable income on line 23200 of the income tax and benefit return [when the excess amount is directly transferred to an issuer to buy an eligible annuity. Otherwise, a deduction for the excess amount is claimed on line 20800 when the excess amount is directly transferred to an RRSP].

My father forgot about the $2000 overcontribution when he retired. Now nearing the age 71 threshold, he is doing some small jobs to earn the ~11k income needed to earn that RRSP contribution room in order to make a final contribution before it all gets converted to a RRIF.

Since he told me about that, I stopped using the overcontribution room.

The $2,000 of RRSP contribution has already been made. One just needs to have earned income to earn the RRSP contribution deduction room needed to deduct the contribution.

One can still earn RRSP contribution deduction room after age 71. Just that one can't have an RRSP of one's own to contribute to. However, one could use that room to contribute to a spousal RRSP belonging a spouse who is not age 71 yet.

When RRSPs were introduced, because contributors might not yet know their eligibility from the year before until their taxed were assessed, there was a lifetime $8K lifetime overcontribution allowance. Later, when the eligibility calculation was moved to the year BEFORE the previous year, the rules were changed.