RRSP Over Contribution....sigh!

[Retire-Canada]

So I was that "guy" and got excited about filling up my RRSP and put in too much. $2,117 too much. I have pulled out $117 for the RRSP and sent that to my Non-Reg account so I am now down to my allowed contribution + the $2k over contribution grace amount. I'm going to write CRA, fall on my sword, and ask them to waive any interest for that $117.

My question is around the extra $2K that is in my RRSP. I understand it can't be deducted from my income for the tax year it was put in so say that's the 2020 tax year. When the 2021 tax year rolls around can I deduct that $2K from my 2021 income assuming I don't over contribute again?

As an example.

2020

- RRSP contribution limit = $10K
- I actually put in $12,117
- I removed $117 from RRSP leaving $12K in for 2020
- when I file my 2020 taxes I deduct $10K from my income that year

2021

- RRSP contribution limit = $10K
- I put in nothing
- when I file my 2021 taxes can I deduct $2K from my 2021 income as if that extra $2K from 2020 was a 2021 RRSP contribition?

Thanks in advance for any help.

[Lews Therin]

Yes.

Overcontributions don't work for your year, but CRA is aware you did it, so can be claimed the next year.

I have done it before by accident, due to the number changing in the tax year, I ended up accidentally over contributing.

[Retire-Canada]

Yes.

Overcontributions don't work for your year, but CRA is aware you did it, so can be claimed the next year.

I have done it before by accident, due to the number changing in the tax year, I ended up accidentally over contributing.

Thanks. I have no excuse beyond raw exuberance!

[Heckler]

You're pulling $117 in a time when JT is dropping off 2K cheques to anyone who asks for one, and some who didn't?    Good for you to be one of the honest ones he is hoping we all are.  I know it's irrelevant to your situation, but I hope the man can turn a blind eye to interest on $117 in these times, we'll see....

[Retire-Canada]

You're pulling $117 in a time when JT is dropping off 2K cheques to anyone who asks for one, and some who didn't?    Good for you to be one of the honest ones he is hoping we all are.  I know it's irrelevant to your situation, but I hope the man can turn a blind eye to interest on $117 in these times, we'll see....

Ha! I should have FIREd a month ago and ridden the CERB wave for a while. ;-)

Just kidding. I have done well financially in Canada and I try and remember I benefited greatly from all of the Governmental programs and supports in this country even if I haven't rec'd a cheque personally.

[bluebelle]

I know there are different schools of thought about how to 'use' the $2,000 over-contribution cushion.   I try to use it for its intended purpose - the wiggle room in case you mis-calculated your contribution room.   I've always had two RRSP funding streams, my personal RRSP, and the group RRSP to get the employer's match.   I've had a couple of years where I get a little unexpected bonus that's included in the employer RRSP....I want to make the maximum contribution without being too far over - I aim to keep it below $300 over-contribution.

[Darren]

Can I ask some really dumb questions? What's the difference between contribution limit and deduction limit? My CRA account says I have about 50k of "deduction limit". Does this mean I could put 50k in my RRSP this year even though that is much more than 18% of my income?

My employment income is about 90k. 18% of that is 16,200. So does that mean I can only contribute 16,200 in this calendar year? Can I contribute more, but only claim 16,200 for this calendar year and then claim part of it for 2021?

I have a company RSP (3% match, I put in 5%) and a personal RRSP I put in about 7%, so I normally contribute about 15% of my employment income to my RRSPs.

I sold a rental property and would like to use some of the profits to top up my RRSP. I am unclear on how much I can actually put in.

[techwiz]

The RRSP Contribution limit is the maximum amount a taxpayer is allowed to deposit into an RRSP annually. The contribution limit is unique to you, it takes into account this year's deduction limit and any past unused contributions from previous years.

CRA can provide you your unique contribution limit and if you can contribute up to that limit this calendar year.

[bluebelle]

Can I ask some really dumb questions? What's the difference between contribution limit and deduction limit? My CRA account says I have about 50k of "deduction limit". Does this mean I could put 50k in my RRSP this year even though that is much more than 18% of my income?

My employment income is about 90k. 18% of that is 16,200. So does that mean I can only contribute 16,200 in this calendar year? Can I contribute more, but only claim 16,200 for this calendar year and then claim part of it for 2021?

I have a company RSP (3% match, I put in 5%) and a personal RRSP I put in about 7%, so I normally contribute about 15% of my employment income to my RRSPs.

I sold a rental property and would like to use some of the profits to top up my RRSP. I am unclear on how much I can actually put in.

RRSP contribution limits accumulate, if you haven't maxed out your RRSP contribution every year, the left over carries forward to use in future years.

You could contribute all $50K this year, but from a life-long tax point of view, you may not want to deduct all $50K against a $90K income, especially if you think you might have some higher income years.   

[TrMama]

Yes.

Overcontributions don't work for your year, but CRA is aware you did it, so can be claimed the next year.

I have done it before by accident, due to the number changing in the tax year, I ended up accidentally over contributing.

Thanks. I have no excuse beyond raw exuberance!

I did the same dumb thing this year. My new personal rule going forward is to not do any banking of any kind late at night. Those decisions never seem to end well.

I also plan to fall on my sword. In the grand scheme of things I could have worse problems.

Maybe next year we can get it right :-)

[ToTheMoon]

Yes.

Overcontributions don't work for your year, but CRA is aware you did it, so can be claimed the next year.

I have done it before by accident, due to the number changing in the tax year, I ended up accidentally over contributing.

Thanks. I have no excuse beyond raw exuberance!

I did the same dumb thing this year. My new personal rule going forward is to not do any banking of any kind late at night. Those decisions never seem to end well.

I also plan to fall on my sword. In the grand scheme of things I could have worse problems.

Maybe next year we can get it right :-)

Lol, I did this last year with my TFSA - made my full contribution twice! (I caught it after a month or so and they waived the penalty for my over-exuberance.)  This has got to be a Mustachian People Problem!