Personal Finance & Money Asked by Bouzid Zitouni on August 19, 2021
I’m starting contributions to both a defined contribution RPP with employer matching and an RRSP account.
I know my RRSP contribution room from last year’s notice of assessment.
What I can’t find an answer for is: "when transferring money to my RRSP, do I need to deduct an estimate of RPP contributions that will be made this year until march of next year?"
No, not if I read your question correctly. One advantage of an employer RPP is it is based on current earnings and the RRSP is based on the previous years earnings. Obviously this is easy and makes sense since the info comes from an actual paycheck.
eg. you have 10k in room from your 2019 NOA for 2020, then you can put 10k in your RRSP in 2020 (plus 2k over if you want). This will reduce your 2021 room on your 2020 NOA by 10k. The 2021 room will increase by 18% of income earned in 2020 minus your RPP contributions in 2020 and also minus a pension adjustment (PA) for the value of the employers contribution. For the maximum pension allowed this will be about 18% of your income. In that case you only get $600 of extra RRSP room every year.
The RRSP plan was intended to copy employer plans with the same rules. It's just that you have to wait a year to get the room.
Correct answer by brian on August 19, 2021
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