Accidentally Went Over Your RRSP Limit? Here’s What You Should Know


Forms, applications, appointments… with everything you need to keep track of, it can be easy to forget how much you’ve contributed to your Registered Retirement Savings Plan (RRSP) this year. As your income fluctuates, so does your RRSP limit, and going over can result in some steep penalties. That’s the last thing you want when you’re trying to save!

Think you may have contributed too much? Your first step is to figure out how much you’re over. The good news is if it’s $2,000 or less, there’s no penalty. You just don’t get a tax deduction for that excess amount.

Think you’re over the $2,000? You can expect a 1% penalty tax for each month you’re over. You have 90 days to remit the tax and file the T1-OVP Individual Tax Return for RRSP Excess Contributions Form, which calculates the over contribution amount and penalty tax owing.

There’s a chance you can avoid the penalty. If you contributed too much by mistake and can show you’re taking reasonable steps to correct it, you may be able to steer clear of the tax.

Here’s how:

If you’re over the $2,000 limit, be sure to withdraw the excess amount ASAP. Though you’ll need to include the withdrawal as income on your tax return, you can claim an offsetting deduction as long as:

One last step! To make sure your financial institution releases the funds without withholding tax, ask the Canada Revenue Agency to certify the excess contribution amount using Form T3012A. Without this form, the tax will be withheld by your bank. Then when it comes time to file your tax return, use Form T746 to claim the offsetting deduction, and a credit for the tax withheld.