RRSP Contributions

[cyra1ax]

Doing my yearly benefits review and wanted to make sure I had my facts straight.

My company matches up to 5% of my salary for RRSP's, from what I understand that amount DOES NOT count towards calculating my contribution limit, however it DOES count towards getting to that contribution limit, right?

Secondly, is that company matched amount supposed to show up on my RRSP slip that I get at the end of the year/March? Or is that amount recorded in the Pension Adjustment box on my T4?

[Feruk]

Why would it not count? It's net income... I'm not 100% sure here, but I don't see how it wouldn't.

As for whether it counts as contributions, therefore reducing your limit, yes.

One other thing to keep in mind is that over contributing to your RRSP is no big deal. When you do your taxes, you simply defer any over contribution to the next year. In that year you contribute a little less, and the whole thing balances out.

The contributions will come on a separate form. You'll usually get it in March. The Pension Adjustment box is for pension plan contributions made by your employer, not RRSP contributions.

[gwill]

You don't get to claim the money your company matches. The t4 from your company rrsp will only have the portion you set aside.

The company claims what they match for you... They don't do this out of the goodness of their heart.. It's because there's something in it for them.

[cyra1ax]

Originally posted by Feruk
Why would it not count? It's net income... I'm not 100% sure here, but I don't see how it wouldn't.



I was just reading on this other thread (http://forums.beyond.ca/showthread.php?threadid=366308) that said that they don't contribute to determining my yearly contribution amount. Good advice on the deferral of over-contributions though, I'll definitely keep that in mind.

Also, it seems like the scenario that gwill is describing is what is acutally happening, I don't see the company contributions at all on the slip that comes at the end of the year. If that's indeed the case that's where I get confused, how does it go towards your contribution limit if the slips you recieve say that you only contributed x amount(without the company contributed funds)?

[Feruk]

Originally posted by gwill
You don't get to claim the money your company matches. The t4 from your company rrsp will only have the portion you set aside.

The company claims what they match for you... They don't do this out of the goodness of their heart.. It's because there's something in it for them.
How exactly would a company claim RRSP contributions?? Only individuals are eligible to hold an RRSP. The company simply pays you more, and that amount automatically gets put into your RRSP.


Originally posted by cyra1ax
Also, it seems like the scenario that gwill is describing is what is acutally happening, I don't see the company contributions at all on the slip that comes at the end of the year. If that's indeed the case that's where I get confused, how does it go towards your contribution limit if the slips you recieve say that you only contributed x amount(without the company contributed funds)?
Have you added up the numbers to see? When I had company matching, both my contribution and company portion were included in the yearly form I got.

[gwill]

When a company matches your rrsp they get good kick backs and returns for doing so. I believe it's deferred profit sharing or something of that sorts... So the govts not going to let 2 people/companies double dip come tax time.

You can call your rrsp line for your company and they could answer your questions... I actually called them on this subject to clarify questions I had this year.

[dirtsniffer]

I can't speak for everyone but my companies portion is definitely included in my rrsp contribution. But it is also listed as a taxable benefit so there is no tax benefit for me.

[dezmarez]

Originally posted by cyra1ax
Doing my yearly benefits review and wanted to make sure I had my facts straight.

My company matches up to 5% of my salary for RRSP's, from what I understand that amount DOES NOT count towards calculating my contribution limit, however it DOES count towards getting to that contribution limit, right?

Secondly, is that company matched amount supposed to show up on my RRSP slip that I get at the end of the year/March? Or is that amount recorded in the Pension Adjustment box on my T4?


Are they matching into a Defined Contribution Pension Plan or into a Group RSP?

[sabad66]

^ good point... maybe you're thinking Registered Pensions and RRSP are the same when in fact they are not.

If you have a value in the pension adjustment field, you're probably getting a pension match not RRSP. Companies will do one or the other.. not both

[killramos]

Can anyone confirm what in the tax code defines these "kickbacks" for the company?

My company matches my contributions either registered or otherwise and I sure as hell pay tax on the amount they match. Its a different line on my pay stub but its still income.

I always thought that companies did this mostly out of a total pay scenario and its just considered a benefit. That and companies do it (and often force registered retirement accounts for this reason) to make sure their employees don't end up as bums come retirement which also looks bad.

Companies can obviously include it as a business expense same as your salary? But that's not much of a "kickback" if you ask me.

[shakalaka]

This is a bit of a tangent and perhaps warrants its own thread, but I have been wondering if I should invest into TFSA more or RRSP's. Currently I have both accounts but I seem to put more into the TFSA and very little comparatively to the RRSP. Should I be putting more in one or the other or evenly distribute both? I read some online articles and different ones say different things, so I am a bit confused.

[ExtraSlow]

There are a couple online calculators available to help answer this question.
My Preferred one is from Taxtips.ca https://www.retirementadvisor.ca/retadv/apps/tfsaRrsp/tfsaRrsp_res.jsp?toolsSubMenu=preRet
I just did this, and for me, RRSP beats TFSA, but it's pretty close.

[dezmarez]

Originally posted by shakalaka
This is a bit of a tangent and perhaps warrants its own thread, but I have been wondering if I should invest into TFSA more or RRSP's. Currently I have both accounts but I seem to put more into the TFSA and very little comparatively to the RRSP. Should I be putting more in one or the other or evenly distribute both? I read some online articles and different ones say different things, so I am a bit confused.


It really depends on the individual, there is no right or wrong answer, which is probably why eery article says something different.

Very very basic assumptions are if you are in a higher effective tax rate now compared to when you retire you should be contributing to RSP.

If you expect to be in the same tax bracket, do both.

If you expect to me in a lower tax bracket now, than in retirement, you should contribute to TFSA.

It really depends on what your goals are, what you do with the tax savings from contributing to an RSP, when you plan on withdrawing, what kind of assets you invest in etc.

[realazy]

It gets really complicated once you have to consider what the government benefits would be when you retire.

People seem to want as little income as possible (from RRSP) so they qualify for the GIS for seniors. Whether that is right or wrong is up to you. It's all part of legally working around the system.

The TFSA is really going to change how this generation plans for retirement.

[gwill]

So i called my rrsp line today to inquire on this since you and i seem to have had a similar scenario. My rrsp slip from them didn't have the portion from my company matches on it. When i called them earlier in the year they said i only had the one slip and that was it...

When i called them yesterday they mentioned that my company was supposed to provide me a separate slip to claim their half and that they actually don't have anything to do with that portion. I wish they were more clear when i called them about this earlier in the year. They couldn't answer any questions on it except to say it does count towards my contribution limit.

It is a deferred profit sharing plan that the company manages their portion on. They never did send me anything but i did buy a new house in dec and moved so its possible that slip was missing in the mail.

Just waiting to hear back from our HR lady to verify whats up with it all.....

[suntan]

Originally posted by realazy
It gets really complicated once you have to consider what the government benefits would be when you retire.

People seem to want as little income as possible (from RRSP) so they qualify for the GIS for seniors. Whether that is right or wrong is up to you. It's all part of legally working around the system.

The TFSA is really going to change how this generation plans for retirement. This is really hard to do, even with the changes the feds put in. By the time you're 71 you're really forced to drain that thing.

[dezmarez]

Originally posted by gwill
So i called my rrsp line today to inquire on this since you and i seem to have had a similar scenario. My rrsp slip from them didn't have the portion from my company matches on it. When i called them earlier in the year they said i only had the one slip and that was it...

When i called them yesterday they mentioned that my company was supposed to provide me a separate slip to claim their half and that they actually don't have anything to do with that portion. I wish they were more clear when i called them about this earlier in the year. They couldn't answer any questions on it except to say it does count towards my contribution limit.

It is a deferred profit sharing plan that the company manages their portion on. They never did send me anything but i did buy a new house in dec and moved so its possible that slip was missing in the mail.

Just waiting to hear back from our HR lady to verify whats up with it all.....


That is the other type of plan, a DPSP combined with a Group RSP. Only the employer can contribute to a DPSP out of profits from the company.

The DPSP contributions reduce the amount you can put into your RSP, this is the amount of your Pension Adjustment on your T4.
So, the employer contributions wouldn't produce an RSP reciept, as the pension adjustment on your T4 slips accounts for their contributions.

The Group RSP contributions that you make into the plan, would produce an RSP reciept.

[realazy]

Originally posted by suntan
This is really hard to do, even with the changes the feds put in. By the time you're 71 you're really forced to drain that thing.

I've had this discussion a few times and if you do early retirement at, let's say 55 or 60, you have plenty of time to spend your RRSP before 65. Once you hit 65, start using your taxed savings and TFSA and collect the GIS. When you hit 71, if you still have money in the RRSP, then good for you, so no more GIS.

This is with the assumption that you draw down your rrsp, not that you have millions and you only spend your investment income. If you do have millions, then who cares?

[suntan]

Do you understand how little you need to make to get GIS? Are you thinking of OAS?

[realazy]

Originally posted by suntan
Do you understand how little you need to make to get GIS? Are you thinking of OAS?

Without checking, I think it was about $43k for a couple before GIS goes to zero.

It all depends how much your taxable investments make when you retire, assuming you actually stop working. Also assuming you don't have a pension other than cpp.