RRSP Contribution Limits and Deadlines

Who can contribute to an RRSP?
Anyone who has earned income can contribute to an RRSP up until the year they turn 71.

Contributions made in the first 60 days of 2009 can be applied against either your 2008 or your 2009 income taxes. This year, the 60th day falls on March 2, 2009.

How much can you contribute?
The contribution limit for 2008 is $20,000 and for 2009 it’s $21,000.

For the 2008 tax year, take the lesser of 18% of income earned in 2007 or the maximum limit of $20,000 less the PA in 2007 if a member of a pension plan (or Past Service Pension Adjustment in 2008) less unused contribution room accumulated after 1990 plus any Pension Adjustment Reversal from 2008.

If this is confusing, you can check your RRSP contribution limit on the Notice of Assessment that the Canada Revenue Agency sent you after processing your 2007 tax return. Your RRSP contribution limit is noted there, including any unused room.

Still unsure? The Tax Information Phone Systems (TIPS) will also give your current contribution limit – Toll Free Number 1-800-267-6999. You must have your SIN and your previous year’s tax return handy.

Alternatively, go to the “My Account” online service (available at www.cra.gc.ca/myaccount) to check their RRSP deduction limit for 2008. “My Account” lets you get personalized information about your RRSP contributions and deduction limits as well as information about payments, installments, outstanding balances, statements of accounts and much more.

Today’s investors are more knowledgeable and more aware than ever before of their financial needs, their choices, and the consequences of their investment decisions. Retirement planning has become a growing concern for Canadian baby-boomers, especially after the challenging investment year we experienced in 2008.

Many realize that by the time they reach retirement, there will be a slim chance that the government pension income that they expect to receive will be sufficient to maintain the standard of living that they envision for their golden years. The two mainstays of government pension income – CPP and OAS – were designed to replace only about 15% of pre-retirement income. And, given that about 35% of Ontario workers are covered by an occupational pension plan, it’s easy to see why investors understand and acknowledge the importance their personal retirement savings plans will play, over and above government and employer pension plans.

As investors realize that they will ultimately be accountable for their own financial security, many faithfully contribute to their RRSPs each year and seek the advice of an investment advisor in designing a self-directed RRSP to fit their personal circumstances, goals and objectives.