Know anyone turning age 71 this year? RRSP contributions must be made by December 31 of the year you turn 71. However, RRSP deductions can be carried forward indefinitely and spread out over several years to reduce taxable earnings in retirement.
Further, you can contribute to a spousal RRSP up until the year your spouse turns 71 if you have available RRSP contribution room (even if the contributor is over 71!).
So, if you’re turning 71 this calendar year, you will need to contribute to your RRSP by December 31 of this year – after that, no more contributions will be allowed (unless, you’re making a spousal RRSP contribution as noted above).
Finally, there is an additional “over-contribution strategy” for those turning 71 in the current year. Manulife does a great job explaining more about this strategy on their website here.
In a nutshell, you estimate your available contribution room for the calendar year. Then, you contribute that amount to your (or your spousal) RRSP prior to December 31st. Remember, 18% of earning = new contribution room (less pension contributions, etc.)
You might be thinking… “Hey Bruce, what about the over-contribution charge?” Gooooood. You’re paying attention! Yes, you will be charged 1% for the month of December for that over-contribution amount. BUT, you could save 20%, 30% or more by contributing. Do the math. Click here to book a free 15-minute virtual Zoom meeting to talk with me. We can explore this together.