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Wednesday, January 12, 2011

Group rrsp, DPSP and pension adjustment

Can someone educated me how this works. Ive read http://www.cra-arc.gc.ca/tx/bsnss/tp.../bx52-eng.html but dont understand.. how to calculate it.

I contribute to a company group rrsp $500 and they match dollar for dollar.


If my employer contributed $500 to the DPSP (deferrred profit sharing plan), it says I will receive a "pension adjustment" and will reduce my next years rrsp contribution limit.


if my annual income is $50,000 my rrsp contribution limit should be $9000 (18% of income). because of the $500 DPSP, it will be reduced to $8500? ($9000-500) am i right? 


 Let's assume your income was $50,000 in 2009 and that you began participating in the program in 2010.
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Your 2010 RRSP contribution room is $9,000. In 2010, you contributed $500 to a GRRSP and your employer matches the contribution dollar for dollar.
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Your employer also contributes $500 to a DPSP.
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Again your 2010 RRSP contribution room is $9,000. You contributed $500 to an RRSP and your employer contributed $1,000 ($500 as a matching contribution and $500 as a DPSP contribution).
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Your PA is your employers contributions, or $1,000.
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At the end of 2010, your carryforward room is $9,000 - $500 (your contribution) - $1,000 (PA) = $7,500.

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