Author Topic: Tracking RRSP contribution room  (Read 4501 times)

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Tracking RRSP contribution room
« on: June 17, 2015, 12:10:48 AM »
Since 1996, I've contributed the obligatory 5% to my RRSP, usually getting an employer match.  Since RRSP limit is 18% of income, I've never come close to maxing out, nor has the wife.  Thus I have a full years salary available in contribution room, she even more than that.

Currently we are saving 30% of my income and next year will have the mortgage paid off, bumping our possible savings rate to 60+%, if not higher. 

We have 5 RRSP accounts and one TSFA between us, with a plan for a second TFSA once the rest are maxed out.  Accounts are his and hers self directed, her self directed LIRA, her Spousal self directed, and his work plan, and her spousal through his work.  Yikes!  I already have a plan to consolidate her LIRA to her RRSP.   The work plans are to accumulate funds at no trading costs and slightly higher MER, and annually move the funds to self directed Vanguard funds with a $9.95 trading fee.

The good news is I believe we have enough tax free or tax deferred contribution room to get to a FIRE number in ten years or less, by investing our mortgage costs starting in 6 months.  I'd like to avoid taxable accounts if possible.


What tips do you have on tracking RRSP contributions, to prevent over contributing?   

morning owl

  • Stubble
  • **
  • Posts: 231
  • Location: Canada
Re: Tracking RRSP contribution room
« Reply #1 on: June 17, 2015, 05:37:25 AM »
Do you have your notice of assessment for last year? That should tell you the total room you have left.

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 13599
  • Age: 38
  • Location: Toronto, Ontario, Canada
Re: Tracking RRSP contribution room
« Reply #2 on: June 17, 2015, 06:06:34 AM »
Yeah, just check your assessment.  (Which you must have because you need to keep all tax filing documents for seven years legally.)

parkette

  • 5 O'Clock Shadow
  • *
  • Posts: 77
  • Age: 35
  • Location: PEI, Canada
Re: Tracking RRSP contribution room
« Reply #3 on: June 17, 2015, 06:27:03 AM »
You can also check it through your account on the CRA website.

RetiredAt63

  • Senior Mustachian
  • ********
  • Posts: 10807
  • Location: Eastern Ontario, Canada
Re: Tracking RRSP contribution room
« Reply #4 on: June 17, 2015, 06:34:07 AM »
Questions - why would you move a LIRA to an RRSP?  The LIRA is "locked in" to a certain age - that is the LI. What effect will that have on the RRSP it moves to?  Will the whole thing then become locked in?  I don't know the answer but whoever you bank with should.  If the whole thing then becomes locked in, you have fewer options for withdrawal, so not a good idea.

I know the initials can be fuzzy, but I am confused about your accounts. Your RRSP with an obligatory 5% and employer match doesn't sound like an RRSP, it sound like an RSP - i.e. a work pension (Retirement Savings Plan).  The extra R in an RRSP is for Registered, which is the personal ones we all can use to either top up our pension if the one at work is below the max, or have one if the employer has no pension.

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 6742
Re: Tracking RRSP contribution room
« Reply #5 on: June 17, 2015, 06:51:06 AM »
So I would plot out your expected income and marginal tax rates for the next few years in a spreadsheet. Look at what various annual RRSP contribution amounts do to your tax rates. You get the biggest bang for your buck moving down the top 1 or 2 marginal tax brackets. So see how much you need to contribute each year to get there and see whether claiming more RRSP in a given year makes sense or if you should hold apply that contribution to a later year.

If you haven't maxed out your TFSA once you get to the optimal point for your RRSP in a given year turn the savings hose onto that account until it's maxed out.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1764
Re: Tracking RRSP contribution room
« Reply #6 on: June 17, 2015, 06:56:05 AM »
CRA website has "my account." It's the best way to track TFSA, RRSP and income tax returns.

http://www.cra-arc.gc.ca/myaccount/

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #7 on: June 17, 2015, 08:13:40 AM »
Yes, I have our assessments, and also My CRA access.  That's only a Jan 1 total though, not live tracking throughout the year.  I'm looking for the best way to either set up my contributions to automatically max out, or be able to track of my contributions. 

I think the problem is we are new at the way of the MMM, and for the past year, I've been slowly pushing up the savings rate.  5%, 8%, 12%, 18%, 25%, shit! she got laid off, 5 %, yeah! she got a new job, 30% and bank half the severance...   

My savings rate has been improving, and we've seen the benefit of the mustache.   I just want to have a great plan in place for when the rate is 60%, without blowing over the RRSP limit.
« Last Edit: June 17, 2015, 08:39:44 AM by Heckler »

MLKnits

  • Bristles
  • ***
  • Posts: 276
Re: Tracking RRSP contribution room
« Reply #8 on: June 17, 2015, 08:16:34 AM »
I'd say just keep close tabs. I don't think there's a good way to track it other than manually; Mint definitely won't do it quite right, and your bank's website might also give you false reads (eg the "book value" of a new investment only works if it doesn't reinvest dividends AND if you don't ever move stuff around).

I'd say just keep a careful spreadsheet of what you're putting in and what each of you is earning, and try to stay a bit below your best calculation of the limit. You can always throw extra in once you get your T4s, if it turns out you have extra contribution room, since the deadline is end of February.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #9 on: June 17, 2015, 08:21:37 AM »
As for the LIRA, I understand it's locked to contributions, so our $4700 of XEF can't grow exponentially, and the cash portion of dividends is so small, it'll be years before it makes sense to buy more units at $9.95 per trade. 


However, if a LIRA is small enough, I believe it can be unlocked and the funds transferred to a RRSP, thus allowing it to grow with contributions.

http://www.fic.gov.bc.ca/pdf/Pensions/LockedIn_Pension_Funds_guide.pdf
« Last Edit: June 17, 2015, 08:29:08 AM by Heckler »

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #10 on: June 17, 2015, 08:24:32 AM »
As for RSP vs RRSP, all our accounts are RRSP, with the work one simply being contributed to with before tax dollars straight off my pay instead of getting a big tax refund at the end of year.   No pensions here.   


Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #11 on: June 17, 2015, 08:27:15 AM »
Yeah, I've ignored the employer/employee contribution reporting in Mint, because I just can't get it to track positives and negatives correctly.  There's no accountant blood in this engineer.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #12 on: June 17, 2015, 08:33:16 AM »
So I would plot out your expected income and marginal tax rates for the next few years in a spreadsheet. Look at what various annual RRSP contribution amounts do to your tax rates. You get the biggest bang for your buck moving down the top 1 or 2 marginal tax brackets. So see how much you need to contribute each year to get there and see whether claiming more RRSP in a given year makes sense or if you should hold apply that contribution to a later year.

If you haven't maxed out your TFSA once you get to the optimal point for your RRSP in a given year turn the savings hose onto that account until it's maxed out.

Good idea!   Sounds like there are even more spreadsheets in my future.
« Last Edit: June 17, 2015, 08:34:59 AM by Heckler »

RichMoose

  • Pencil Stache
  • ****
  • Posts: 964
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Tracking RRSP contribution room
« Reply #13 on: June 17, 2015, 10:50:56 AM »
As for the LIRA, I understand it's locked to contributions, so our $4700 of XEF can't grow exponentially, and the cash portion of dividends is so small, it'll be years before it makes sense to buy more units at $9.95 per trade. 


However, if a LIRA is small enough, I believe it can be unlocked and the funds transferred to a RRSP, thus allowing it to grow with contributions.

http://www.fic.gov.bc.ca/pdf/Pensions/LockedIn_Pension_Funds_guide.pdf

Can you do a synthetic DRIP on this for the time being? I have a LIRA as well and it seems like quite the pain to do anything with it.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Tracking RRSP contribution room
« Reply #14 on: June 17, 2015, 11:17:05 AM »
Thats why i hold only XEF in the LIRA- its a semiannual Dividend that will DRIP $54 this June,but also leave $18.57 uninvested. Lame (when you pay transaction fees to invest)

Look into unlocking your small LIRA Tuxedo. I think it was you who got me looking into it.
« Last Edit: June 17, 2015, 11:19:03 AM by Heckler »