RRSP over contribution
Long story short, I miscalculated the RRSP room when I had to transfer out a lump amount from the previous job's pension plan to another pension plan (due to the surplus of the pension conversion calculation). At the end, I realized I over contributed $8,037 for 2019 RRSP. I just got a Notice of Assessment from CRA for my 2019 tax return. According to their RRSP deduction limit statement, it shows a credit balance of ($5,136) for the available contribution room for 2020 (Note: 18% of Income earned in 2019 minus 2019 pension adjustment = $2,901 RRSP deduction limit for 2020, and they apply this room to the $8,037 over contribution).
I had multiple calls with the CRA agents. The first agent told me to withdraw the excess amount ASAP to minimize the penalty, and fill out the 2019 T1-OVP form to calculate the penalty, then mail in the cheque for the amount owed along with the form. The form has several schedules and kind of confusing. So, I called again to confirm how to fill it out properly. The agent I talked to this afternoon told me that the assessment shows over contribution for 2020 (Available contribution room for 2020), it means I should be filling out the 2020 T1-OVP form (not 2019 T1-OVP form), and the 2020 form is not available until early next year in Jan/Feb 2021.
I just want to confirm with someone who has experience with this. Is it correct that I only need to file the 2020 T1-OVP form next year ?
The second agent also pointed out that the pension adjustment from my 2020 income will also change this over contribution amount they currently shows on the assessment. However, I would not know what the 2020 pension adjustment will be until 2020 T4 is available next year..... Since I left the last job with pension plan in Feb 2020, she said I could just estimate based on the last year pension adjustment i.e. 2019 pension adjustment divided by 12 x 2 months of pension adjustment, and withdraw extra amount from the RRSP account on top of what it shows on the 2019 CRA assessment right now.
Sorry for the long and complicated story. Hope someone who has experience with this can give me some advice what I need to do now, especially how much to withdraw the RRSP account ASAP before the end of July to avoid another month of penalty. Originally, the agent said I could withdraw $3,136 (because of the $2,000 forgiveness amount).
Note: I have not been contributing any other RRSP since the lump sum transfer in June 2019 which caused the over contribution problem. Job with pension plan ended in Feb 2020. Thus, no more pension adjustment since that.