Registered Retirement Savings Plan (RRSP) Contributions
An RRSP is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax.
Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.
Contributing to an RRSP February 29, 2016, is the deadline for contributing to your RRSP for amounts you want to deduct on your 2015 tax return.
Age limit for contributing to an RRSP December 31 of the year you turn 71 years of age is the last day you can make a contribution to your RRSP. See RRSP options when you turn 71 if this situation applies to you.
You can contribute to an RRSP under which your spouse or common-law partner is the annuitant until the end of the year your spouse or common-law partner turns 71.
Setting up an RRSP You set up a registered retirement savings plan through a financial institution such as a bank, credit union, trust or insurance company. Your financial institution will advise you on the types of RRSP and the investments they can contain.
You may want to set up a spousal or common-law partner RRSP. This type of plan can help ensure that retirement income is more evenly split between both of you. The benefit is greatest if a higher-income spouse or common-law partner contributes to an RRSP for a lower-income spouse or common-law partner. The contributor receives the short term benefit of the tax deduction for the contributions, while the annuitant, who is likely to be in a lower tax bracket during retirement, receives the income and reports it on his or her income tax and benefits return.
You may want to set up a self-directed RRSP if you prefer to build and manage your own investment portfolio by buying and selling a variety of different types of investments. For more information on eligible investments, see Self-directed RRSPs. If you are considering this type of RRSP, be sure to
consult with your financial institution. You make your RRSP contributions directly to the RRSP issuer. For more information, contact a qualified investment advisor. (RRSP). Generally, the amount you can contribute to your RRSPs or your spouse or common-law partner’s RRSPs, for a given tax year without tax implications is determined by your RRSP deduction limit. This is often called your “contribution room.” Amounts that you contribute above this limit may be considered excess contributions (over-contributions).
Your RRSP deduction limit is the amount of RRSP contributions that you can deduct on your tax return for a given year.
Contributions you make to a spousal or common-law partner RRSP reduce your RRSP deduction limit. The total amount you can deduct for contributions you make to your RRSP or your spouse’s or common-law partner’s RRSP cannot be more than your RRSP deduction limit. For more information, see How much can I contribute and deduct?
If you cannot contribute to your RRSP because of your age, you can still contribute to your spouse’s or common-law partner’s RRSP until the end of the year he or she turns 71. For more information, see RRSP options when you turn 71.
Example: Joey’s 2014 RRSP deduction limit is $10,000. Joey contributes
$4,000 to his RRSP in 2014, and $6,000 to his common-law partner Ghislaine’s RRSP in 2014. Joey deducts the $4,000 he contributed to his RRSP on line 208 of his 2014 income tax and benefit return. Although Joey contributed $6,000 to his common-law partner’s RRSP in 2014, he decides to only deduct $5,500 of this contribution on his 2014 income tax and benefit return. He may be able to deduct the remaining $500 ($10,000 – $9,500) on a future year’s income tax and benefit return.
Funds in an RRSP cannot be moved or transferred to an RRSP that does not have the same annuitant as the RRSP where the money is coming from. For example, you cannot transfer funds in your RRSP to a spousal or common-law partner RRSP.
Information acquired from http://www.cra-arc.gc.ca
Note Contributions to a pooled registered pension plan (PRPP) or a specified pension plan (SPP) are subject to the same rules as RRSP contributions. Contributing to your spouse’s or common-law partner’s RRSPs How much can I contribute and deduct?
Note Contributions to a pooled registered pension plan (PRPP) or a specified pension plan (SPP) are subject to the same rules as RRSP contributions. For more information, go to Contributions to a PRPP or see “Specified pension plan contributions” at Specified pension plan lump-sum payments.