Employer Match: Purposely Overcontributing to RRSP?

[tomatops]

Hi all,

A complex tax scenario that I hope I am understanding correctly:

I have maxed out my RRSP available room, meaning I have $0 of contribution room left. I still was saving for retirement at an old job I held earlier in 2018 through a DB pension plan, which on my T4 I would see a Pension Adjustment (PA), would would adjust down next year's (i.e. 2019) available RRSP room.  I imagine once I file my 2018 taxes, I will have maybe only $3k of new RRSP room for 2019 due to the old job's Pension Adjustment.

Now I've started a new job with a Group RRSP. They match every 6% of my pay by 7.5%, effectively more than doubling my money per contribution. However, as Group RRSPs do not produce PAs, they draw down existing RRSP room, meaning that $3k that just got added for 2019 will disappear and I will enter overcontribution mode probably come April.

So the question is: Should I still keep myself enrolled in that RRSP matching program despite the overcontributions? By end of 2019 tax year, I estimate I would be overcontributing by $12,000.

[Goldielocks]

I see three options here.

1.  Stop contributing to RRSP (Boo! I wouldn't do this)
2.  Continue to claim it, and if you are directed to remove it, write a letter to request ra waiver of the penalty, and you might have to remove a portion of the RRSP at that later end of year tax time....   by the time it happens, however, it will be a very short time until you have room available again.   I did this, and by the time I wrote for the waiver, it was the next RRSP year (January / Feb) and i had room again.
3.  Keep the employer match, but withdraw other RRSP funds that year.   this way you keep the match, but you end up paying taxes on your other withdrawals.


hmmm ... you might have another option... from CRA

"Generally, you have to pay a tax of 1 % per month on excess contributions that exceed your RRSP/PRPP deduction limit by more than $2,000 unless you:
withdrew the excess amounts, or
contributed to a qualifying group plan"

Because the employer match is to a group plan, perhaps you are NOT penalized on the overage...   i don't know if your plan is a "qualifying group plan", but maybe you can find out.

[Stasher]

I would take a penalty to not loose out on that generous employer match, they is free money that any penalties or interest will not impact. GoldieLocks is always a wealth of information. Looks like you will have a better idea of where you are at for room after you file your 2018 taxes and in the meantime just let your employer match keep rocking.