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Final RRSP Contribution at Age 71

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RRSPs RRIFs and TFSAs -> Final RRSP Contribution at Age 71

RRSP Excess Contribution at Age 71

If you have earned income in the year you turn 71, which generates RRSP contribution room for the following year, you can only use this room to contribute to the RRSP of a younger spouse or by making an excess contribution to your own RRSP in the year you turn 71.  This is because your RRSP must be converted to a RRIF by the end of the year in which you turn 71.

Let's say you earn enough in 2017, the year you turn 71, to generate $10,000 of contribution room for 2018.  If you contribute $10,000 to your RRSP in December of 2017, you will pay a penalty of $80 (1% x ($10,000-$2,000)) for the one month end of the excess contribution.  Excess contributions over $2,000 are subject to the penalty.  As of January 1, 2018, it will no longer be an excess contribution, and the $10,000 can be deducted on your 2017 tax return.

If you have earned income and thus contribution room after age 71, you can make contributions to the RRSP of a spouse who is 71 or younger.  However, see the attribution rules regarding subsequent withdrawals made by the spouse from the RRSP or a RRIF.

See also:

RRSP conversion to RRIF

Tax Tip:  It may be advantageous to over-contribute to your RRSP in December of the year you turn 71.

Revised: September 19, 2017

 

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