By Sheryl Smolkin
Making maximum annual available contributions to Saskatchewan Pension Plan plus your Registered Retirement Savings Plan and Tax-Free Savings Account will help to ensure that you have the retirement savings you need to support yourself once you leave the world of work.
However, there probably have been years when you have not been able to make the full available contributions. But fortunately, both RRSP and TFSA contribution room can be carried forward, so if your financial circumstances improve in future or you get a windfall like an inheritance or win a lottery, you can catch up.
Here is some information about 2016 and 2017 contribution limits plus how you can find out whether you have contribution room that has been carried forward.
You can contribute up to $2,500 a year to SPP. In order to do so, you must have RRSP contribution room (see below). SPP contribution room cannot be carried forward if contributions are not maxed out each year. You can also transfer up to $10,000/year from your RRSP to SPP. Again, this transfer limit cannot be aggregated and carried forward to future years.
The RRSP deduction and contribution limit is 18% of your earned income to a maximum value each year. The maximum RRSP contribution limit for 2016 is $25,370 and for 2017 it will be $26,010. Unused contributions are carried forward each year, so if you didn’t maximize your RRSPs in previous years, you can add the unused amount to this year’s limit. RRSP contribution room is not restored in future years if you withdraw funds.
You can find out how much RRSP contribution room you have by going to:
- The “Available contribution room for 2016” amount found on the RRSP/PRPP Deduction Limit Statement, on your latest notice of assessment or notice of reassessment
- Form T1028, Your RRSP/PRPP Information for 2016. CRA may send you a Form T1028 if there are any changes to your RRSP/PRPP deduction limit since your last assessment.
- My Account
- MyCRA mobile app
- Tax information Phone Service (TIPS)
Since the Tax Free Savings Account (TFSA) was introduced in 2009, Canadian residents over the age of 18 with a social insurance number have been permitted to contribute on annual basis. Here are the contribution limits by year:
- 2009-2012: $5,000
- 2013-2014: $5,500
- 2015: $10,000
- 2016: $5,500
- 2017: $5,500.
If you are setting up a TFSA for the first time in 2016 you can contribute up to $46,500 (or $52,000 if you want to also make 2017 contributions). Withdrawals are permitted and the amount you take out can be re-contributed in the following year in addition to the $5,500 allotted for the next year plus any other carry forward of TFSA contribution room you may have.
Keeping track of available TFSA contribution room is important because if you over contribute, anything over the allowed tax free contribution room is subject to a 1% penalty charged on a monthly basis on the highest excess tax free savings amount.
You can also obtain information about your TFSA contribution room using the My Account feature offered by the Canada Revenue Agency. Another option is to call the CRA Tax information Phone Service (TIPS).