Personal Finance

How PA affect your RRSP contribution room

  • Last Updated:
  • Feb 15th, 2021 11:16 pm
[OP]
Newbie
Feb 21, 2011
76 posts
12 upvotes
Toronto

How PA affect your RRSP contribution room

Let assume you have PA=0 and Contribution room of $4000 shown on your 2020 NOA. In Year 2021 your employer creates a group RRSP for employees. As such you receive $3000 in your group RRSP account. Now my question is that what is the amount left for you to contribute yourself in Year 2021? Thanks
2 replies
Deal Addict
Jun 18, 2018
1327 posts
819 upvotes
Toronto
Pension adjustment and RRSP are not connected in any way; but both reduce your deduction limit (the amount you can claim on your return).

So it would be $4k-3k = $1k
Deal Addict
Oct 24, 2010
1346 posts
1125 upvotes
Ottawa
Electrah wrote: Pension adjustment and RRSP are not connected in any way; but both reduce your deduction limit (the amount you can claim on your return).

So it would be $4k-3k = $1k
As long as OP is sure it's a group RRSP and not a Defined Contribution Pension Plan, though DCPPs aren't usually associated with lump sums.

The two can look similar from an employee's perspective, but the DCPP ends up locked in, and yields a Pension Adjustment. For a DCPP, your 2021 contribution room would be $4k, and your 2022 room would be reduced by the $3k PA.

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