what happens to the unused over contributions when it's time to convert to RRIF | RRSPs and RRIFs | Discussion forum

Are they actually overcontributions (above RRSP contribution room) or just undeducted contributions within one's RRSP contribution room?

For overcontributions, I found earlier that Income Tax Act paragraph 146(8.2)(c) allows a special offsetting deduction for the withdrawals of overcontributions only within certain time windows.

One cannot make any further RRSP contributions after age 71. But, one can still use the RRSP deductions for contributions made before age 71 that one had RRSP contribution room for and were not previously deducted.

T3012A can only be used to "undo" RRSP overcontributions under certain conditions listed on the back of the form. This is one of them:

• You or your spouse or common-law partner will receive the refund of contributions from an RRSP, PRPP or SPP:

– in the year you made the contributions;
– in the following year; or
– in the year that we sent you a notice of assessment or notice of reassessment for the year you made the contributions, or in the following year.

I agree that if it's past the limits Norman1 referred to in post #8 you're stuck, can't get it out (either from RRSP or RRIF) without it being included in income, no offsetting deduction - at least from what I can see. So when you overcontribute up to $2K you have to remember to deduct it in the year you cease to have employment income or else take it out within a year or so of ending employment income, else you get double-taxed.

Maybe there's a remedy as Norman1 suggests:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/change-your-return.html

But I think CRA ignores amounts under a dollar or two, so I'd suggest your change be more than 50 cents.

tc said
guys
tks for the info and 'suggestions', but cra still has the final word

"In addition, it has to be reasonable for us to consider that at least one of the following conditions applies:

• you reasonably expected to be able to fully deduct the RRSP, PRPP and SPP contributions for the year you made the contributions or the immediately preceding year; or

• you did not make the unused RRSP, PRPP or SPP contributions intending to withdraw them and deduct an offsetting amount."

looks like I'm stuck with the double tax

I think you satisfy both conditions:

1. You had expected to be able to deduct the entire RRSP contribution made. Just that an arithmetic error was made and you ended up contributing $800 too much.
2. I don't think you purposely overcontributed and planned to use T3012A or T746 to get the special offsetting deduction to "undo" the contribution.

Some people used to overcontribute on purpose when interest rates were much higher. Overcontribute by $1,900 and then maintain the overcontribution for years. Way back when savings accounts paid 7% per annum interest, that would be an extra $133 a year in the RRSP.

RRSP contributions don't have to be deducted in the year one earned the contribution room to deduct them. Since earned contribution room also carries forward, the undeducted contributions can be deducted in any future year.

I don't think tc had the opportunity to undercontribute in a future year. tc retired after that $800 overcontribution was unintentionally made.

Without triggering a reassessment, the only other way I can think of is to somehow earn $800 of RRSP contribution room before age 71. It would require about $4,450 of earned income.