RRSP contribution room? (and deferral question)

[We'reGonnaWin]

Additional question amended:

I've got a question I'd like to tack on with out starting a new topic. Can I contribute to a registered RRSP plan but defer claiming the contribution as a tax-deduction for when I'm in a higher tax bracket?

As in, I put money into a registered plan with a brokerage for investment purposes, but don't claim the deduction yet.

-------------------------------------

Hopefully this is a simple question. If I've never contributed to my RRSP before, what is my available contribution room based on this?:

2007 RRSP deduction limit $8,971
(Calculation of 2007 RRSP deduction limit)

2006 deduction limit $6,407
(Calculation of 2006 deduction limit)
2005 unused RRSP contributions $0

2005 deduction limit $2,329
(Calculation of 2005 deduction limit)
2004 unused RRSP contributions $0

2004 deduction limit $312
(Calculation of 2004 deduction limit)
2003 unused RRSP contributions $0

2003 deduction limit $312
(Calculation of 2003 deduction limit)
2002 unused RRSP contributions $0

2002 deduction limit $213
(Calculation of 2002 deduction limit)
2001 unused RRSP contributions $0

2001 deduction limit $143
(Calculation of 2001 deduction limit)
2000 unused RRSP contributions $0

I pulled all this off my epass account. Is my limit merely the sum of all those deduction limits? (143+213+312+312+2329+6407+8971)=18687?

[advantage21]

I pulled all this off my epass account. Is my limit merely the sum of all those deduction limits? (143+213+312+312+2329+6407+8971)=18687?


That is correct.

[asdfvcx]

That is correct.
I'm reasonably certain it's not. The total available contribution room is $8971.

Here's an easy way to check. It 2006, how much money did you earn? If it's roughly $50,000 advantage is correct. If it's closer to $14,000, I'm correct. If you're not sure, you shouldn't be contributing to an RRSP. :)

[seshwan]

It is $8971.

[mself084]

It is 8971. If you look at the calculations for each, you will notice they figure out how much you can contribute for that year, and add the previous amount.

[Khrak]

I'd think $8971 but it does have "unused RRSP contributions" listed as $0 in every case, which implies to me that it isn't carrying the total forward.

As mentioned before. If your 2006 income was ~$50,100, then $18,687 is correct. If your 2006 income was ~$14,250, then $8971 is correct.

[asdfvcx]

I'd think $8971 but it does have "unused RRSP contributions" listed as $0 in every case, which implies to me that it isn't carrying the total forward.

Unused RRSP contributions are contributions that you have made but decided not to claim. So, if you made a contribution this year but are in a low tax bracket and know you will be in a higher tax bracket in a future year, you can wait to claim the deduction when you are in the higher tax bracket.

This is how Revenue Canada keeps track of these deferred deductions.

[We'reGonnaWin]

My 2006 income was just from a work-term for around $14,000. But I haven't ever made and/or claimed any contributions. Why might it not be carrying my contribution room forward? I've never made/claimed any contributions ever.

[asdfvcx]

My 2006 income was just from a work-term for around $14,000. But I haven't ever made and/or claimed any contributions. Why might it not be carrying my contribution room forward? I've never made/claimed any contributions ever.
It is carrying the contribution room over.

Your RRSP limit is 18% of your annual earned income (up to a maximum which you aren't close to) plus the carried over contribution room.

18% of 14K is about $2500. Your total contribution room in 2006 was $6400.

And 6400 + 2500 = 8900, or your contribution limit for 2007.

Make sense?

[Thalo]

There could be a pension adjustment in the calculation too. He doesn't necessarily make $14K/year.

The actual maximum amount he can contribute and claim this year (between now and Feb 29, 2008) is the 2007 limit plus 18% of 2007 income (if he knows what it'll be) minus pension adjustment. If he does max it out though, his 2008 contribution room will be 0. And if he over-estimates it would eat into the $2000 lifetime over-contribution limit.

[advantage21]

I'm reasonably certain it's not. The total available contribution room is $8971.


Yup, I'm wrong.:cry: Ignore my post. $8971 is the correct contribution limit.

[We'reGonnaWin]

Yup, I'm wrong.:cry: Ignore my post. $8971 is the correct contribution limit.

Thanks to all of you for double checking for me, nonetheless. I'm admittedly financially illiterate, and want to do as much reading up as possible before taking the plunge after graduating. I've been reading up on the difference brokerages here and have narrowed it down to Questrade and Interactive Brokers to deal with my RRSP.

Is it a simple matter to make my ~$8900 contribution now but defer my claim? I'm obviously in a very low tax bracket and think I'd get more out of my contributions if I claimed them when my income is a bit higher.

[Arkaine]

Thanks to all of you for double checking for me, nonetheless. I'm admittedly financially illiterate, and want to do as much reading up as possible before taking the plunge after graduating. I've been reading up on the difference brokerages here and have narrowed it down to Questrade and Interactive Brokers to deal with my RRSP.

Is it a simple matter to make my ~$8900 contribution now but defer my claim? I'm obviously in a very low tax bracket and think I'd get more out of my contributions if I claimed them when my income is a bit higher.

Valid point, but you won't be getting that extra money back at tax time which you could be investing to earn some more interest income. Plus that little extra could add towards more of an income tax refund next year if you put it into your RRSPs.

[asdfvcx]

Thanks to all of you for double checking for me, nonetheless. I'm admittedly financially illiterate, and want to do as much reading up as possible before taking the plunge after graduating. I've been reading up on the difference brokerages here and have narrowed it down to Questrade and Interactive Brokers to deal with my RRSP.

Interactive Brokers doesn't allow RRSP accounts.

Questrade only allows stock trading and doesn't have mutual funds. If you are financially illiterate, you really want to avoid directly trading stocks.

You probably want to take a look at a basic personal finance book, such as The Wealthy Barber, just so you have a firm grasp of the basics, before you part with your money.

[We'reGonnaWin]

Interactive Brokers doesn't allow RRSP accounts.

Questrade only allows stock trading and doesn't have mutual funds. If you are financially illiterate, you really want to avoid directly trading stocks.

You probably want to take a look at a basic personal finance book, such as The Wealthy Barber, just so you have a firm grasp of the basics, before you part with your money.

I've read Wealthy Barber. I think Questrade is the best fit for my situation. I'm not looking into stock or mutual fund trading -- just ETFs and QT seems to have that.

[pitz]

$8971, plus you can toss in another $2000 as an 'overcontribution' (but you can't deduct overcontributions).

Whether an overcontribution makes sense....is an entirely different area for debate. If you are a GIC or savings account 'investor', then, yes, use up your overcontribution room -- you'll save taxes in the long run.

If you invest solely with index funds or other highly tax efficient entities, then you probably won't gain much, if any benefit, in the long run, from an overcontribution.

[We'reGonnaWin]

I've got a question I'd like to tack on with out starting a new topic. Can I contribute to a registered RRSP plan but defer claiming the contribution as a tax-deduction for when I'm in a higher tax bracket?

As in, I put money into a registered plan with a brokerage for investment purposes, but don't claim the deduction yet.

[asdfvcx]

I've got a question I'd like to tack on with out starting a new topic. Can I contribute to a registered RRSP plan but defer claiming the contribution as a tax-deduction for when I'm in a higher tax bracket?
Yes, there's an easy to fill out section when you are filling in your taxes, to let Rev Can know that you made an RRSP contribution, but don't want to claim it.

They'll keep track of the amount for you, and you can claim it at a later year.