What is the maximum amount I am allowed to contribute to my RRSP each year?
You can contribute up to 18% of your earned income less any Pension Adjustment if you belong to a Registered pension Plan. However, you cannot exceed the maximum amount of $16,500 for 2005, $18,000 for 2006, $19,000 for 2007, $20,000 for 2008, $21,000 for 2009 and $22,000 for 2010. After that, the maximum amount is indexed to average wage growth starting in 2011. • What happens if I contribute over my RRSP limit? You are allowed a one time over contribution amount of $2,000. After that amount is exceeded, CCRA will penalize you 1% per month until the excess is withdrawn. • Do I have to pay tax on any returns I make on investments held in my RRSP each year? No. Any taxes on earnings are deferred until they are withdrawn from the plan. At that time, any money you withdraw from an RRSP is fully taxable.
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