If you’ve recently been widowed, make sure you take advantage of the tax-deferred rollover that allows your spouse’s RRSP to transfer into yours with no tax consequences and without needing additional contribution room.
With the loss of your spouse/partner you may be concerned about having to save for retirement on your own. If you’re working, set up automatic transfers to your RRSP account to coincide with your paydays. Also, be sure to take advantage of any contribution matching offered by your employer.
You may want to contribute even if you don’t need the tax deduction in a given year. This can be useful for people who have widely variable income (sales people, business owners, etc.). You can carry the contribution forward and then claim it in a year where your income is higher.
Know your annual RRSP contribution limit. The annual figure is the lesser of 18% of your earned income in the previous year or the annual RRSP limit. You also must subtract any pension adjustments or past service pension adjustments to derive your annual limit.
Know your contribution carry forward room. Any unused contribution room is carried forward and can be used in future years. You’ll find the contribution room carried forward on your annual notice of assessment or contact the CRA.
If you receive a large lump sum of money, such as a life insurance policy or proceeds from the sale of assets, consider using it to catch up on any unused contribution room, or repay any funds borrowed under the Home Buyers’ Plan or Lifelong Learning Plan.
If you’ve contributed the maximum amount allowed in your RRSP, consider catching up on your allowable Tax Free Savings Account (TFSA) contributions.
