I have a client who over contibuted to her RRSP in 2019 by just over $30,000. I completed an T1OVP for her.
She then withdrew $30,000. from her RRSP 's. , thinking this would free up space for her over contribution. It don’t believe it does. Am I correct in this? and if she pays the T1OVP penalty what happens to the RRSP over contribution - Can we deduct future RRSPs from this amount or must it be refunded?
It does actually. On the 2021 tax return you will have a $30,000 RRSP contribution carried forward and a $30,000 RRSP income inclusion and you use T746 to fix the over contribution problem with the CRA. She only has to pay the penalty up to the date she withdrew the funds from her RRSP.
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Thank you so much Laurie
I have never had to deal with an over contribution to an RRSP - now my cousin’s widow made a 76K contribution to her RRSP - she only had $23K maximum contribution deduction and she ends up with $76K undeducted contributions to carry forward. Can someone point me in the right direction here? I am trying to read the T1OVP forms but…?? Do I need to ask her to take it to a CPA? I think I understand that she should transfer the entire amount to a TFSA but will she be faced with penalties?
Obhorst - is this an actual over contribution or did she rollover the RRSP from her deceased spouse?
I just finished asking her that question - it is a rollover from her husband’s RRSP. I assumed that would make a difference but I have a hard time following the 4-5 pages of excess contribution forms.
If the $76k contribution is a rollover from her deceased husband’s RRSP then she should also have a T4RSP for the same amount. Her RRSP limit is not taken into account if it’s a transfer arising from the death of a spouse. The RRSP contribution receipt will be needed to offset the income created by the T4RSP.
TaxCycle will handle this properly provided the T4RSP is properly entered into the software, the RRSP contribution is entered into the RRSP worksheet, and the area of the worksheet for RRSP transfers is completed.
The T1OVP form is not necessary in such a case, as there is no over contribution.
It’s supposed to rollover to her without affecting her RRSP contribution room, therefore no overcontribution situation. Her financial institution should have issued an RRSP contribution slip to offset. She’ll have to ask them for a copy.
Thank you for those very helpful answers. I emailed a CPA for a bit of help on a question that I had not encountered before and he responded with a telephone call answer which I received when I was out of the office - he did not write anything down - except for his invoice. I do give him referrals so I was a bit surprised when I got his invoice. In other words, I am trying to say that this forum was worth over $300 to me today. Thank you! I figured there had to be a simple answer.
She had the contribution slip but no T4RSP. She would have received that information later. When I imported the AFR again this morning, the T4RSP was there. Now all is good - thanks so much @snoplowguy, @laurie, and @tsolowczuk. Being able to tap into a resource like this is priceless!
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I have a similar situation; my client received RRSP funds- rollover from her deceased spouse. She received RRSP receipt dated Jan 2024, but no T4RSP slip; the bank informed her that T4RSP will be issued for 2024. The RRSP contribution must be recorded for 2023 year, but it will be offset by T4RSP in 2024. I’ve recorded RRSP slip and indicated it as unused contribution available for next year. The program doesn’t let me proceed because “contribution room is less than the undeducted contributions”. Please advise how to offcet this transfer in 2023?