knowledge topics

RRSP Contributions

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM 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)

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
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 judgement through careful study
Interpret

To give the meaning of / to construe or understand / to translate orally

REFERENCES

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Financial Planning Body of Knowledge

knowledge topics

RRSP Contributions

KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals

Glossary of Verbs (mouse over to see definition)

REFERENCES

KNOWLEDGE EXPECTED OF: Both CFP^® Professionals and QAFP^TM Professionals