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RRSP Unused Contributions

Hello All,

My client overcontributed to his RRSP in 2016 and 2017. February 2017 he withdrew the excess $15.6K. I am now filing 2018 tax return. I have a T4RSP for the amount withdrawn with tax withholding.
I logged into CRA and assess his account and it states RRSP deduction limit 2018 $7K and RRSP/PRPP unused contribution s $17K.

I am a bit lost, I think I need to complete S7 RRSP and PRPP Unused Contributions, Transfer,etc form and record the 17K.

Can someone advise if I am on the right track.

Many thanks!

The T4RSP should be for 2017 unless you meant that he withdrew it in Feb 2018. I’d think there needs to be a T746 in there somewhere to offset the withdrawal with his overcontribution but I think those only work if there were contributions in the same year the withdrawal was made… Not sure how to handle it when they are in different years.

Laurie, yes your are correct. The 15.6K was withdrawn February 2018.

Hello. I think I recall helping you on this case last year. You would file a T746 with the return to claim a deduction for the withdrawn excess contributions. The deduction is allowed if overcontribution was withdrawn in the year the overcontribution was made, the year it was assessed, or the following year.

You would also file a final T1OVP return for 2018 to account for excess contribution tax up to month of withdrawal.

Feel free to email or PM me with any questions

Thanks ddickca, I will.

Hi I have a new client this year with the same situation. He over contributed in 2015, however nobody catch the mistake. Last year, he transfer all his RRSP to a insurance company, and set up a lifetime annuity, which will pay him income for life, just like a CPP. The answer from the insurance company is he cannot withdraw his money anymore because the payout already started. I’m in the process of filing T1OVP, but I would like to know is there any other action he can take to avoid future penalty? If he can’t withdraw it, the excess contribution penalty will be there for life :(.

Thanks

Here is something to be aware of… As the withdrawals from the annuity occur, they are withdrawals from the over-contribution, reducing the penalty for the T1-OVP.

However, you are limited for the tax-free deduction of the over-contribution which must be done within certain time limits and subject to certain conditions. I would draw your attention to Form T746 and T3012A for that information. Note that you must read BOTH forms to have an understanding of the limitations as the information is not complete on either form. (I find that the T3012A has more information than the T746, but it still isn’t perfect.)

Oh… so the withdrawals from annuity monthly can be treated as the over-contribution… I just have to show the withdrawals on the T1-OVP then correct?

As for the tax-free deduction, I read the form, and the annuity withdrawals, which is T4RSP box 16, is not one of the way of withdrawal for deduction. So no matter if it is the same year, or following year, annuity payment cannot be treat as a deduction?

And Thank you for your reply.