RRSP Contribution Timing
January 16, 2011 8:28 AM   Subscribe

Let's say Jack is in his 20s and in March 2011 he gets his first ever paycheque of $1000. He wants to put $100 into an RRSP account. When can he make this first deposit? Is it right away in March 2011, the first day in January 2012, or in April 2012 after he finally gets all his tax forms and files his taxes, getting a notice of assessment that states his contribution limit?
posted by ajackson to Work & Money (3 answers total)
Right away. You can contribute to an RRSP in any year that you have income.

You can also make RRSP contributions for a given calendar year up to 60 years into the following calendar year.
posted by davey_darling at 9:23 AM on January 16, 2011

Yep, In addition, your RRSP contribution limit starts at $2000 even before you have any income. If you expect your income to increase substantially over the next few years, you may want to open a TFSA instead. The TFSA is more flexible, and can hold the same assets as the RRSP. The tax advantage of the RRSP over the TFSA is very small unless your income is quite high.
posted by thenormshow at 10:27 AM on January 16, 2011

I'm reading the CRA website RRSP webpage, and I'm understanding it otherwise--can someone see where I am wrong?

Let's change the scenario a little bit so we can ignore the issue of the $2000 excess contribution limit. Imagine Jack makes $30,000 in a single paycheque and wants to deposit $3000 into an RRSP right away.

Jack's "RRSP Deduction Limit for 2011" is $0, because he made zero income in 2010. I believe your current year deduction limit in based on income generated the year prior?

If he makes a $3000 deposit, then he is instantly over his year 2011 deduction limit of $0 plus the $2000 excess contribution limit. This is an overcontribution, is it not?

If I go through Chart 4 on the CRA website, I think this situation passes all the criteria for an overcontribution?
posted by ajackson at 8:07 PM on January 17, 2011

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