Can a deceased individual's legal representative contribute to the individual's RRSP after the date of death?
No.
However, the deceased individual's legal representative can make contributions to the surviving spouse's or common-law partner's RRSPs in the year of death or during the first 60 days after the end of that year, up to the individual's RRSP deduction limit for that year, and deduct those contributions on the deceased individual's return for the year of death.
I'm 72 years old. Can I deduct my unused RRSP contributions?
Even though you can no longer contribute to your RRSPs after the year you turn 71 years old, you can deduct unused RRSP contributions up to the amount of your RRSP deduction limit. You do not have to claim the undeducted contributions in a single year. Be sure to fill out Schedule 7, RRSP, PRPP and SPP Contributions and Transfers and HBP and LLP Activities.
If you want to deduct the unused contributions on a return for a previous year, based on the allowable deduction limit for the applicable year(s), you can request an adjustment using My Account for Individuals.
Your unused RRSP contributions from previous years are shown on My Account for Individuals, your RRSP Deduction Limit Statement in your latest notice of assessment or notice of reassessment, or on Form T1028, Your RRSP Information for 2023.
Can I transfer my deduction limit to another person?
No.
I've never filed a return, although I worked during the summer of 2022 and 2023. I made a$100 RRSP contribution in the fall of 2023. Can I deduct it?
Your RRSP deduction limit for 2023 is based on your earned income for 2022 (and on earned income from previous years, if you had any). Since you have not filed a return yet, we have no record of your earned income from 2022or 2023, so your RRSP deduction limit for 2023 shows as zero. You can file your tax return for 2022 and 2023 and we will update your RRSP deduction limit.
You can leave the funds in your RRSP and deduct part or all of it on your 2023 return (or a future return) up to your deduction limit. Be sure to show your contributions on Schedule 7 when you file your 2023 return so the funds will be available for 2023 or to carry forward for future years. Include your contribution receipt with your 2023 return.
If the 2023 return is not assessed by the time you need to file your 2024 return, do not claim your$100 deduction just yet. After you get your notice of assessment for 2023, you can request a change using My Account for Individuals.
FAQs
The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.
At what point should I stop contributing to RRSP? ›
December 31 of the year you turn 71 years old is the last day that you can contribute to your RRSPs.
Does it make sense to contribute to RRSP? ›
Investing in an RRSP can reduce your tax burden and grow your retirement savings. Grow your nest egg by taking advantage of compound interest, early contributions, and automated payments.
What is the 3 year rule for RRSP? ›
Spousal RRSPs come with a three-year attribution rule, which only permits withdrawals three years after the deposit date. So, for example, if you deposit funds into a spousal RRSP on January 1, 2024, your spouse or common-law partner won't be able to withdraw the funds until January 1, 2027.
How much does the average Canadian have in RRSP at retirement? ›
$129,000. According to Ratehub, the average 65-plus-year-old Canadian has $129,000 saved in their RRSP. The figure rises to about $160,000 if you include the Tax-Free Savings Account (TFSA).
Is it worth over contributing to RRSP? ›
If you end up with an RRSP over-contribution in excess of the $2,000 buffer, you may owe taxes. The CRA will charge you a 1% penalty, assessed monthly, for each month you're over the limit.
Should you max out RRSP contributions every year? ›
However, unless you maximize your RRSP contributions every year, you will likely cheat yourself out of significant benefits at retirement. To take advantage of tax-free compounding over time, it is vital to contribute as much money every year you can and as early as possible.
What is the best amount to contribute to RRSP? ›
Generally speaking, you should aim to contribute at least 10% of your gross income each year to your retirement savings. Start contributing in your early 20s, and that 10% per year could add up to a sizeable savings and a comfortable retirement. Start later in life—say, your late 30s—and 10% a year may not cut it.
What is the best practice for RRSP? ›
Contribute early
Procrastination can be costly, so make your RRSP contribution early in the year. The sooner you put your money into an RRSP, the sooner it starts working for you on a tax-deferred basis. If you can't do it all in January, a monthly contribution program is simple and powerful.
When not to contribute to an RRSP? ›
Even though you can no longer contribute to your RRSPs after the year you turn 71 years old, you can deduct unused RRSP contributions up to the amount of your RRSP deduction limit. You do not have to claim the undeducted contributions in a single year.
It's worth noting again that there's a limit on how long Canadians are allowed to keep an RRSP. The age limit is 71 years. After the age of 71, the RRSP turns into a Registered Retirement Income Fund (RRIF) of which a certain amount must be withdrawn every year.
Is it better to put money in RRSP or TFSA? ›
Which is better? The short answer: For longer term savings goals, like retirement — RRSP. For short- or medium-term savings goals, like an emergency fund or buying a car — TFSA.
Does the 4 rule still work? ›
Retirees who are depending on their savings to fund essential expenses would want to have a conservative approach. However, those who have can withstand more market fluctuations may have more flexibility with withdrawal rates. For those retirees, the 4% rule likely will provide an outdated recommendation.
What is the $1000 a month rule for retirement? ›
One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.
How long will $500,000 last in retirement? ›
Summary. If you withdraw $20,000 from the age of 60, $500k will last for over 30 years. Retirement plans, annuities and Social Security benefits should all be considered when planning your future finances. You can retire at 50 with $500k, but it will take a lot of planning and some savvy decision-making.
How long will money last using the 4% rule? ›
This rule is based on research finding that if you invested at least 50% of your money in stocks and the rest in bonds, you'd have a strong likelihood of being able to withdraw an inflation-adjusted 4% of your nest egg every year for 30 years (and possibly longer, depending on your investment return over that time).
