RRSP Contributions

KNOWLEDGE EXPECTED OF: QAFP^® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs

Awareness The state of being aware that something exists / to have familiarity with a particular activity or subject		Understanding To comprehend the general relationship of particulars / to have an expertise with how something works	Application Ability to put information to use / to use knowledge for relevant, practical purposes					Evaluation To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define To state exactly the meaning of	Identify To be aware of / to recognize and correctly name / to locate an appropriate resource	Explain To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it	Determine To ascertain / to come to a decision, such as by investigation or reasoning	Compare To note the similarities and differences between two or more things	Estimate To determine an approximate value for	Calculate To find the value using mathematics	Convert To change from one form or purpose to another	Evaluate To reach a conclusion or make a through careful study	Interpret To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

Define earned income as it is used in the calculation of a Registered Retirement Savings Plan contribution limit.
Estimate earned income.
Define the maximum money purchase limit as established by the Canada Revenue Agency.
Identify the current maximum money purchase limit established by the Canada Revenue Agency.¹
Define pension adjustment (PA).
Explain a pension adjustment.
Explain the purpose of the pension adjustment.²
Explain the circumstances when a pension adjustment may exist.³
Identify the value of a pension adjustment.
Define pension adjustment reversal (PAR).
Explain a pension adjustment reversal.
Explain the purpose of a pension adjustment reversal.⁴
Explain the circumstances when a pension adjustment reversal may exist.⁵
Identify the value of a pension adjustment reversal.
Define past service pension adjustment (PSPA).
Explain a past service pension adjustment.
Explain the purpose of a past service pension adjustment.⁶
Explain the circumstances when a past service pension adjustment may exist.⁷
Identify the value of a past service pension adjustment.
Define amounts associated with a Registered Retirement Savings Plan, such as: ⁸

Registered Retirement Savings Plan Limit
Registered Retirement Savings Plan Deduction Limit

Identify factors that determine total Registered Retirement Savings Plan deduction limit.⁹
Explain how each of the factors that determine the total Registered Retirement Savings Plan deduction limit affects the limit.
Explain the age limit for contributing to a Registered Retirement Savings Plan.¹⁰

For a personal Registered Retirement Savings Plan
For a spousal or common-law partner Registered Retirement Savings Plan

Identify the current maximum Registered Retirement Savings Plan limit.¹¹
Identify the sources from which a Registered Retirement Savings Plan deduction limit may be obtained.¹²
Identify a Registered Retirement Savings Plan deduction limit.
Calculate a Registered Retirement Savings Plan deduction limit.
Identify unused Registered Retirement Savings Plan contributions.
Explain the risk when unused Registered Retirement Savings Plan contributions exceed the Registered Retirement Savings Plan deduction limit.¹³
Identify types of contributions that may be made to a Registered Retirement Savings Plan.

Cash
Deposit in-kind

Explain how contributions made to a Registered Retirement Savings Plan affect the total Registered Retirement Savings Plan contribution limit.

For contributions to a personal Registered Retirement Savings Plan
For contributions to a spousal Registered Retirement Savings Plan

Explain when contributions made to a Registered Retirement Savings Plan may be deducted.¹⁴
Identify the deadline by which Registered Retirement Savings Plan contributions must be made for the deduction to be permitted against the taxpayer’s income for the taxation year.¹⁵

Determine how each of these factors may impact the suitability of contributing to a Registered Retirement Savings Plan:
- Tax rate at time of contribution
- Expected tax rate at time of withdrawal
- Liquidity required
- Propensity to draw on savings
- Impact of future withdrawals on government benefits
- Impact on cash flow
- Potential for matching contributions by employer
- Opportunity cost of contribution

Evaluate how each of the factors may impact the suitability of contributing to a Registered Retirement Savings Plan.

Explain the tax impact of contributing to a Registered Retirement Savings Plan.
Estimate the tax impact of contributing to a Registered Retirement Savings Plan.
Define a cumulative excess amount (over-contribution) for Registered Retirement Savings Plan contribution purposes.¹⁶
Calculate the cumulative excess amount (over-contributions) for Registered Retirement Savings Plan contribution purposes.
Identify the current lifetime cumulative excess amount (over-contribution) that is permitted for Registered Retirement Savings Plans by the Canada Revenue Agency without penalty.¹⁷

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Explain the lifetime cumulative excess amount (over-contribution) that is permitted for Registered Retirement Savings Plans by the Canada Revenue Agency without penalty.¹⁸

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Explain the penalty tax imposed by the Canada Revenue Agency for cumulative excess amounts (over-contributions) for a Registered Retirement Savings Plan.

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Calculate the penalty tax that may be imposed by the Canada Revenue Agency based on a cumulative excess amount (over-contribution) in a Registered Retirement Savings Plan.¹⁹
Explain who is responsible for the penalty tax imposed by the Canada Revenue Agency for an excess amount (over-contribution).

On a personal Registered Retirement Savings Plan
On a spousal Registered Retirement Savings Plan

Explain the options available when a cumulative excess amount (over-contribution) exists in a Registered Retirement Savings Plan.

Withdraw amount equivalent to cumulative excess amount (over-contribution) to avoid further accruing of penalties
Maintain the cumulative excess amount (over-contribution) and continue to have penalty tax accrue until Registered Retirement Savings Plan contribution limit grows to match cumulative excess amount (over-contribution)

Determine the tax impact of withdrawing an excess amount (over-contribution) from a Registered Retirement Savings Plan.

For a personal Registered Retirement Savings Plan
For a spousal Registered Retirement Savings Plan

Determine how each of these factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Registered Retirement Savings Plan:

Penalty cost of maintaining excess amount in the plan
Expected rate of return on investments
Expected time period for Registered Retirement Savings Plan contribution room to match the value of the excess amount
Withholding taxes on withdrawal of excess amount
Plans for excess amount withdrawn

Evaluate how each of the factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Registered Retirement Savings Plan.

REFERENCES

¹ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html

² http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pa-fe/menu-eng.html

³ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pa-fe/menu-eng.html

⁴ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/par-fer/menu-eng.html

⁵ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/par-fer/menu-eng.html

⁶ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pspa-fesp/menu-eng.html

⁷ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pspa-fesp/menu-eng.html

⁸ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#limit

⁹ https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/contributing-a-rrsp-prpp/contributions-affect-your-rrsp-prpp-deduction-limit.html#hwddctnlt

¹⁰ https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4040-rrsps-other-registered-plans-retirement-2016/rrsps-other-registered-plans-retirement.html#P1125_32292

¹¹ http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html

¹² http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html

¹³ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/nnsd-eng.html

¹⁴ https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/contributing-a-rrsp-prpp/what-unused-rrsp-prpp-contributions.html

¹⁵ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/dts-eng.html

¹⁶ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/xcss-eng.html

¹⁷ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/xcss-eng.html

¹⁸ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/xcss-eng.html

¹⁹ http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/t1vp-eng.html

KNOWLEDGE EXPECTED OF: CFP^® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs

Awareness The state of being aware that something exists / to have familiarity with a particular activity or subject		Understanding To comprehend the general relationship of particulars / to have an expertise with how something works	Application Ability to put information to use / to use knowledge for relevant, practical purposes					Evaluation To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define To state exactly the meaning of	Identify To be aware of / to recognize and correctly name / to locate an appropriate resource	Explain To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it	Determine To ascertain / to come to a decision, such as by investigation or reasoning	Compare To note the similarities and differences between two or more things	Estimate To determine an approximate value for	Calculate To find the value using mathematics	Convert To change from one form or purpose to another	Evaluate To reach a conclusion or make a through careful study	Interpret To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

Define earned income as it is used in the calculation of a Registered Retirement Savings Plan contribution limit.
Estimate earned income.
Define the maximum money purchase limit as established by the Canada Revenue Agency.
Identify the current maximum money purchase limit established by the Canada Revenue Agency.¹
Define pension adjustment (PA).
Explain a pension adjustment.
Explain the purpose of the pension adjustment.²
Explain the circumstances when a pension adjustment may exist.³
Identify the value of a pension adjustment.
Define pension adjustment reversal (PAR).
Explain a pension adjustment reversal.
Explain the purpose of a pension adjustment reversal.⁴
Explain the circumstances when a pension adjustment reversal may exist.⁵
Identify the value of a pension adjustment reversal.
Define past service pension adjustment (PSPA).
Explain a past service pension adjustment.
Explain the purpose of a past service pension adjustment.⁶
Explain the circumstances when a past service pension adjustment may exist.⁷
Identify the value of a past service pension adjustment.
Define amounts associated with a Registered Retirement Savings Plan, such as:⁸

Registered Retirement Savings Plan Limit
Registered Retirement Savings Plan Deduction Limit

Identify factors that determine total Registered Retirement Savings Plan deduction limit.⁹
Explain how each of the factors that determine the total Registered Retirement Savings Plan deduction limit affects the limit.
Explain the age limit for contributing to a Registered Retirement Savings Plan.¹⁰

For a personal Registered Retirement Savings Plan
For a spousal or common-law partner Registered Retirement Savings Plan

Identify the current maximum Registered Retirement Savings Plan limit.¹¹
Identify the sources from which a Registered Retirement Savings Plan deduction limit may be obtained.¹²
Identify a Registered Retirement Savings Plan deduction limit.
Calculate a Registered Retirement Savings Plan deduction limit.
Identify unused Registered Retirement Savings Plan contributions.
Explain the risk when unused Registered Retirement Savings Plan contributions exceed the Registered Retirement Savings Plan deduction limit.¹³
Identify types of contributions that may be made to a Registered Retirement Savings Plan.

Cash
Deposit in-kind

Explain how contributions made to a Registered Retirement Savings Plan affect the total Registered Retirement Savings Plan contribution limit.

For contributions to a personal Registered Retirement Savings Plan
For contributions to a spousal Registered Retirement Savings Plan

Explain when contributions made to a Registered Retirement Savings Plan may be deducted.¹⁴
Identify the deadline by which Registered Retirement Savings Plan contributions must be made for the deduction to be permitted against the taxpayer’s income for the taxation year.¹⁵

Determine how each of these factors may impact the suitability of contributing to a Registered Retirement Savings Plan:
- Tax rate at time of contribution
- Expected tax rate at time of withdrawal
- Liquidity required
- Propensity to draw on savings
- Impact of future withdrawals on government benefits
- Impact on cash flow
- Potential for matching contributions by employer
- Opportunity cost of contribution

Evaluate how each of the factors may impact the suitability of contributing to a Registered Retirement Savings Plan.

Explain the tax impact of contributing to a Registered Retirement Savings Plan.
Estimate the tax impact of contributing to a Registered Retirement Savings Plan.
Define a cumulative excess amount (over-contribution) for Registered Retirement Savings Plan contribution purposes.¹⁶
Calculate the cumulative excess amount (over-contributions) for Registered Retirement Savings Plan contribution purposes.
Identify the current lifetime cumulative excess amount (over-contribution) that is permitted for Registered Retirement Savings Plans by the Canada Revenue Agency without penalty.¹⁷

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Explain the lifetime cumulative excess amount (over-contribution) that is permitted for Registered Retirement Savings Plans by the Canada Revenue Agency without penalty.¹⁸

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Explain the penalty tax imposed by the Canada Revenue Agency for cumulative excess amounts (over-contributions) for a Registered Retirement Savings Plan.

For annuitants that are 19 years or older at any time during the year
For annuitants that are under 19 years of age at any time during the year

Calculate the penalty tax that may be imposed by the Canada Revenue Agency based on a cumulative excess amount (over-contribution) in a Registered Retirement Savings Plan.¹⁹
Explain who is responsible for the penalty tax imposed by the Canada Revenue Agency for an excess amount (over-contribution).

On a personal Registered Retirement Savings Plan
On a spousal Registered Retirement Savings Plan

Explain the options available when a cumulative excess amount (over-contribution) exists in a Registered Retirement Savings Plan.

Withdraw amount equivalent to cumulative excess amount (over-contribution) to avoid further accruing of penalties
Maintain the cumulative excess amount (over-contribution) and continue to have penalty tax accrue until Registered Retirement Savings Plan contribution limit grows to match cumulative excess amount (over-contribution)

Determine the tax impact of withdrawing an excess amount (over-contribution) from a Registered Retirement Savings Plan.

For a personal Registered Retirement Savings Plan
For a spousal Registered Retirement Savings Plan

Determine how each of these factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Registered Retirement Savings Plan:

Penalty cost of maintaining excess amount in the plan
Expected rate of return on investments
Expected time period for Registered Retirement Savings Plan contribution room to match the value of the excess amount
Withholding taxes on withdrawal of excess amount
Plans for excess amount withdrawn

Evaluate how each of the factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Registered Retirement Savings Plan.