knowledge topics
RRSP Contributions
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- 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.2
- 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.3
- Explain the circumstances when a pension adjustment reversal may exist.3
- 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.4
- Explain the circumstances when a past service pension adjustment may exist.4
- Identify the value of a past service pension adjustment.
- Define amounts5 associated with a Registered Retirement Savings Plan, such as:
- Registered Retirement Savings Plan Limit
- Registered Retirement Savings Plan Deduction Limit
- Identify factors that determine total Registered Retirement Savings Plan deduction limit.6
- Explain how each of the factors that determine total Registered Retirement Savings Plan deduction limit affects the limit.
- Explain the age limit for contributing to a Registered Retirement Savings Plan.7
- 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.8
- Identify the sources from which a Registered Retirement Savings Plan deduction limit may be obtained.9
- 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.10
- 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.9
- Identify the deadline by which Registered Retirement Savings Plan contributions must be made in order for the deduction to be permitted against the taxpayer’s income for the taxation year.11
- Explain how each of the factors may impact the suitability of contributing to a Registered Retirement Savings Plan, such as:
- 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.12
- 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.12
- 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.12
- 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.13
- 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)
- Explain 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
- Explain how each of the factors may impact the suitability of withdrawing a cumulative excess amount (over-contribution) from a Registered Retirement Savings Plan, such as:
- 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.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally

REFERENCES
- http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html
- http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pa-fe/menu-eng.html
- http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/par-fer/menu-eng.html
- http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/pspa-fesp/menu-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#limit
- http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-e.html#rrsp_dl
- 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
- http://www.cra-arc.gc.ca/tx/rgstrd/papspapar-fefespfer/lmts-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/nnsd-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/dts-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/xcss-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/t1vp-eng.html