How is RRSP contribution room calculated?
Your new room each year is 18% of your prior-year earned income, up to an annual dollar limit (about $31,560 for the current year), minus any pension adjustment from an employer pension plan. Unused room from previous years carries forward and is added to this amount.
Where do I find my RRSP room?
Your exact RRSP deduction limit is on your latest Notice of Assessment from the CRA and in your CRA My Account. It already reflects your earned income, prior contributions, carryforward, and pension adjustments.
What happens if I over-contribute to my RRSP?
You are allowed a $2,000 lifetime over-contribution buffer. Contributions beyond that are subject to a penalty of 1% per month on the excess until withdrawn. Track your room carefully to avoid this.
What is a pension adjustment?
If you belong to an employer registered pension plan or deferred profit sharing plan, a pension adjustment reduces your RRSP room to reflect the retirement savings already accruing through work. It appears on your T4 and lowers the new room you generate.