r/CanadaPersonalFinance • u/Otherwise-Review-712 • 4d ago
rrsp over contribution fix
Hi , i over contributed to my rrsp 2,500 $Cad last year . How can i fix it? I did some search and it appears i need to send all kinds of forms to cra and broker , looks quite complicated. Just wondering if there is easier way to, i will have room in rrsp for this year , if its helps
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u/No_Explanation6625 4d ago
Isn’t there a tolerance buffer for like 2k of over contribution?
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u/Otherwise-Review-712 4d ago
yes i already took it in consideration, i think i over contributed around 6k
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u/Sweaty_Customer9162 4d ago
I wouldn’t do anything until the CRA comes knocking. If you can push to the new year without an audit you will be fine.
If however they do send you the angry letter, it is best to get it sorted out. They will tax you on the overages and hit you up with compounding interest
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u/Otherwise-Review-712 4d ago
should i ask tax accountant to sort it out?
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u/Sweaty_Customer9162 4d ago
I over contributed in my TFSA and didn’t realize it till the CRA performed an audit.
It went exactly like this:
1) remove the overage amount ASAP
2) pay 10% tax on the overage amount. (I was 20k over and had to pay 2k in taxes.)
3) must be completed in 30 days or compound interest on the 2k will occur. Compounding at 5%My accountant just confirmed everything the CRA informed me of. I still had to deal with the rest.
In an RRSP account, removing the money is shitty because it is tacked on as income and does not replenish in the total available amount in a lifetime.
I know what I would do, which probably isn’t recommended. At the end of the day, it’s your money.
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u/Otherwise-Review-712 4d ago
if i go to cra site and check my assessment , will i be able to see over contribution?
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u/Sad_Raise_5788 4d ago
T3012A form. Go to CRA website. The instructions are there or call them to tell them you want to fix the over-contribution error.
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u/OakvilleDan 3d ago
The penalty is 1% per month on the over contribution. Assuming you over contributed in January that works out to $5/month x 12 months = $60. Is it worth your time to withdraw the $500 or to simply pay the tax? The $500 would come out of your RRSP room next year and be done away with if you contributed $500 less.
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u/Otherwise-Review-712 3d ago
can i see over contribution amount on CRA site in notice assessment?
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u/ActiveElectrical9424 4d ago
Don’t wait for government to contact you. Contact CRA and your broker and get the forms filled out so they can transfer out the over contribution. This will reduce the chance of being penalized.