Personal Finance

RPP matching and RRSP limit

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  • Jan 13th, 2013 1:16 pm
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[OP]
Member
Mar 17, 2011
256 posts
3 upvotes

RPP matching and RRSP limit

Hello,

My employer matches my contribution into an RPP. The amount I contribute is deducted from my RRSP contribution limit. What about the amount my employer contributes? Should that be deducted as well?

In real numbers, I have a limit of 13,600 CAD for 2012. I already contributed 5,000 CAD as a lump sum. Then I've contributed around 3,500 to the RPP. Should I consider that I've contributed 8,500 or 12,000?

Thanks.

Mc
16 replies
Deal Addict
Aug 30, 2011
2196 posts
364 upvotes
Ottawa
The amount you can contribute to your RRSP is determined by CRA (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... s-eng.html)
You can find your RRSP deduction limit by going to one of the following:

line (A) of the RRSP Deduction Limit Statement, on your latest notice of assessment or notice of reassessment;
a T1028, Your RRSP Information for 2012, that we sent you after processing your 2011 return;
My Account;http://www.cra-arc.gc.ca/esrvc-srvce/tx ... u-eng.html
Quick Access;http://www.cra-arc.gc.ca/esrvc-srvce/tx ... u-eng.html
Tax information Phone Service (TIPS).
No one on this forum can tell you how much you can contribute.
[OP]
Member
Mar 17, 2011
256 posts
3 upvotes
I do have that limit amount and it is 13,600 CAD. I now want to know if and how the RPP contributions, by myself and my employer, count towards that limit.
Deal Addict
Aug 30, 2011
2196 posts
364 upvotes
Ottawa
McClane wrote:
Jan 9th, 2013 11:35 am
I do have that limit amount and it is 13,600 CAD. I now want to know if and how the RPP contributions, by myself and my employer, count towards that limit.
If your RRSP deduction room is $13,500, that's what you can contribute. Your RPP values are already factored into this amount.
Jr. Member
Oct 26, 2012
193 posts
23 upvotes
McClane wrote:
Jan 9th, 2013 11:35 am
I do have that limit amount and it is 13,600 CAD. I now want to know if and how the RPP contributions, by myself and my employer, count towards that limit.
You need to take your employer contribution into account. Your employer will add the matched amount as a taxable benefit, and you will then add that same amount to your RRSP contribution. That will have a net effect of cancelling each other out in terms of taxes owing, so no need to worry about that.
You've contributed 12k so far.
Deal Addict
Aug 30, 2011
2196 posts
364 upvotes
Ottawa
huiohuio wrote:
Jan 9th, 2013 12:05 pm
You need to take your employer contribution into account. Your employer will add the matched amount as a taxable benefit, and you will then add that same amount to your RRSP contribution. That will have a net effect of cancelling each other out in terms of taxes owing, so no need to worry about that.
You've contributed 12k so far.
????? Not correct.
Call the CRA if you are not clear on how much to contribute and deduct.
Maximum contributions you can deduct

The maximum you can deduct on line 208 is the lesser of:

-the unused RRSP contributions identified as amount (B) of "Your 2012 RRSP Deduction Limit Statement" shown on your latest notice of assessment, notice of reassessment, or T1028, Your RRSP Information for 2012, plus the total of your RRSP contributions made from March 1, 2012, to March 1, 2013, (not including amounts you designate as HBP or LLP repayments, see lines 6 and 7); and
-your RRSP deduction limit for 2012 (see line 10) plus amounts you transfer
(see line 11) to your RRSP on or before March 1, 2013.
Deal Addict
Jun 8, 2004
1257 posts
229 upvotes
Oakville
It's been a while since I looked at this stuff...but I am pretty sure the answer is.

You will likely have an extra $3500 for the employer contribution will be included in your T4 and reported under line 101 or 104 as a taxable benefit. The $7000 contributed to RPP will be reported as a deduction on line 207, and your $5000 RRSP contribution will be reported on line 208, and you will likely report $7000 under line 206 as a pension adjustment.

The contribution room for 2012 was already determined based on prior year's 2011 income, so this year's $7000 RPP contribution does not use up any of the $13,600 of contribution room for 2012, so you will have $13,600 - 5000 = $11,600 of contribution room carried forward to 2013. Your contribution room for 2013 will be 18% of 2012 income - 7000 PA (from line 206) + carryforward of $11,600, so 2013 contribution room will be reduced by the 2012 RPP contribution.

So, the RPP contribution will be similar to making an RRSP contribution next year, as it will be considered against 2013 contributions, and not 2012 contributions. But, bottom line is that the RPP contribution does reduce your RRSP contribution room...just a matter of when it was considered used.
Deal Addict
Aug 30, 2011
2196 posts
364 upvotes
Ottawa
I'm seeing a bit of misinformation in this thread. RPP contributions DO NOT directly impact RRSP contribution room. The CRA determines how much you can contribute to your RRSP, and you should not worry about amounts you paid into your RPP. They have already been factored in.

The pension adjustment is a value that is NOT simply your RPP contributions. It shows up on your T4 slip and is used by CRA in determining your RRSP contribution room.

OP, please just call the CRA if this is not clear for you.
Line 206 - Pension adjustment

The pension adjustment (PA) amount is the value of the benefits you earned in 2012 under your employer's registered pension plans (RPP) and deferred profit sharing plans (DPSP), and possibly, some unregistered retirement plans or arrangements.

The amount is shown in box 52 of your T4, Statement of Remuneration Paid slip or box 034 of your T4A, Statement of Pension, Retirement, Annuity and Other Income slip.

Generally, the PA reduces your registered retirement savings plan (RRSP) deduction limit for the following year. You can find your RRSP deduction limit and more by registering for My Account.
Deal Addict
Jun 8, 2004
1257 posts
229 upvotes
Oakville
OttawaGardener wrote:
Jan 9th, 2013 11:37 am
If your RRSP deduction room is $13,500, that's what you can contribute. Your RPP values are already factored into this amount.
Incorrect...The RPP value has not already factored into the current figure. It will be factored into calculating next year's amount, but not factored into this year's amount.
Deal Addict
Aug 30, 2011
2196 posts
364 upvotes
Ottawa
cba123 wrote:
Jan 9th, 2013 1:47 pm
Incorrect...The RPP value has not already factored into the current figure. It will be factored into calculating next year's amount, but not factored into this year's amount.
Agree. OP is worrying about how much to contribute this year. I'm trying to keep it simple for him.
Jr. Member
Oct 26, 2012
193 posts
23 upvotes
OttawaGardener wrote:
Jan 9th, 2013 2:12 pm
Agree. OP is worrying about how much to contribute this year. I'm trying to keep it simple for him.
OP is asking whether his employer's RPP contribution counts as an RRSP contribution subjected to RRSP limits. He already knows his limit.
Deal Addict
User avatar
Feb 1, 2005
2089 posts
134 upvotes
McClane wrote:
Jan 9th, 2013 11:14 am
Hello,

My employer matches my contribution into an RPP. The amount I contribute is deducted from my RRSP contribution limit. What about the amount my employer contributes? Should that be deducted as well?

In real numbers, I have a limit of 13,600 CAD for 2012. I already contributed 5,000 CAD as a lump sum. Then I've contributed around 3,500 to the RPP. Should I consider that I've contributed 8,500 or 12,000?

Thanks.

Mc
Your limit for 2012 is what you can put into your RRSP for 2012 (or the first 60 days of 2013).

You should consider that you've put in $5,000, not $8,500 nor $12,000.

The $3,500 you put in and the $3,500 your employer put in will be factored in how much you can contribute to your RRSP in 2013, which will be detailed in your Notice of Assessment for the 2012 tax year.

In other words, you can still put in (ignoring the $2,000 overcontribution cushion allowance) 13,600 - 5,000 = 8,600 (which I think is what you're really asking?).
Jr. Member
Oct 26, 2012
193 posts
23 upvotes
ShopperfiendTO wrote:
Jan 9th, 2013 3:28 pm
Your limit for 2012 is what you can put into your RRSP for 2012 (or the first 60 days of 2013).

You should consider that you've put in $5,000, not $8,500 nor $12,000.

The $3,500 you put in and the $3,500 your employer put in will be factored in how much you can contribute to your RRSP in 2013, which will be detailed in your Notice of Assessment for the 2012 tax year.

In other words, you can still put in (ignoring the $2,000 overcontribution cushion allowance) 13,600 - 5,000 = 8,600 (which I think is what you're really asking?).
I was wrong, this guy's right.
Deal Fanatic
Feb 1, 2006
9099 posts
215 upvotes
Employer contribution is not always a taxable benefit! Depends on how plan is set up. My company's DC RPP is not a taxable benefit. It's only a taxable benefit if you are allowed to take the money out before 65. If it's locked in, no taxable benefit.

And sometimes your Pension Adjustment actually IS just your contributions plus your employers. If it's a simple DC RPP, for example.
Deal Addict
Oct 9, 2005
1788 posts
145 upvotes
RPP contributions are tax deductible, so the employer contribution is not a taxable benefit if its locked in because it would just cancel out. Like Bullseye said, the employer contribution is reported in the pension adjustment on the T4, and that pension adjustment lowers your RRSP contribution room by that amount for the next year.
So the rrsp contribution room for 2013 will be:
13,600 - 5,000 - 3,500 - 3,500 + (18% of 2012 income, max $23,820)
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