RRSP Contribution Limit Calculation Quiz
40 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

If an individual's earned income is $60,000, what is their annual RRSP contribution limit?

  • $20,000
  • $27,830
  • $12,000
  • $10,800 (correct)

    • What is the consequence of over-contributing more than $2,000 to an RRSP?

  • Tax credit for the over-contribution
  • Penalty tax of 1% per month on the excess (correct)
  • Immediate tax deduction
  • No consequence

    • When can an individual no longer carry forward their unused RRSP contribution room?

  • End of the year after turning 65
  • End of the year after turning 71 (correct)
  • End of the year after turning 75
  • End of the year after turning 70

    • What is a way to avoid the penalty tax for over-contributing to an RRSP?

    <p>Withdraw the excess contributions</p> Signup and view all the answers

    What is the penalty tax rate for over-contributions to an RRSP above $2,000?

    <p>1%</p> Signup and view all the answers

    What is the maximum RRSP contribution limit for the year in question for Janice?

    <p>$27,830</p> Signup and view all the answers

    How is the RRSP contribution limit calculated for Janice?

    <p>As 18% of her total income</p> Signup and view all the answers

    Why are adjustments made to the RRSP contribution limit for participants in RPPs or DPSPs?

    <p>To account for pension adjustments and past service adjustments</p> Signup and view all the answers

    How do RRSP contributions affect the income tax deductions for individuals?

    <p>They decrease the amount of income tax paid</p> Signup and view all the answers

    What is one of the benefits of contributing to an RRSP?

    <p>It reduces the individual's taxable income</p> Signup and view all the answers

    What is the deadline for contributing to a spousal plan after an individual turns 71 years of age?

    <p>December 31 of the year in which the spouse turns age 71</p> Signup and view all the answers

    How are in-kind contributions valued when contributing to an RRSP?

    <p>At their current market value</p> Signup and view all the answers

    If an individual contributes in-kind assets with a market value that exceeds the purchase price, what must be reported on their tax return?

    <p>The capital gain</p> Signup and view all the answers

    What is the purpose of calculating an individual's annual RRSP contribution limit?

    <p>To determine the maximum amount one can contribute each year</p> Signup and view all the answers

    How is the annual RRSP contribution limit calculated for an individual?

    <p>Based on 18% of the previous year's earned income, up to the maximum limit</p> Signup and view all the answers

    What is the formula for calculating the annual RRSP contribution limit?

    <p>18% of previous year's earned income</p> Signup and view all the answers

    Which of the following is NOT included in earned income for calculating RRSP contribution room?

    <p>Investment income</p> Signup and view all the answers

    What component adjusts the RRSP contribution limit for participants in Registered Pension Plans?

    <p>Pension Adjustment (PA)</p> Signup and view all the answers

    In the context of RRSP contributions, what is the purpose of the Notice of Assessment (NOA) provided by the Canada Revenue Agency?

    <p>Determining the maximum annual RRSP contribution limit</p> Signup and view all the answers

    How does the Canada Revenue Agency calculate RRSP contribution room if an individual has unused RRSP deduction room?

    <p>Carries it forward to future years</p> Signup and view all the answers

    If Jon and Craig each contribute $13,800 annually to their RRSPs, what will be the difference in their managed RRSP savings after 30 years?

    <p>$141,969</p> Signup and view all the answers

    Under current RRSP legislation, who will have to make larger minimum withdrawals in the future between Jon and Craig?

    <p>Jon</p> Signup and view all the answers

    What is the maximum RRSP contribution limit for Craig based on the information provided?

    <p>$4,000</p> Signup and view all the answers

    How much can Jon contribute annually to his RRSP based on his earned income from last year?

    <p>$13,800</p> Signup and view all the answers

    What strategy can Jon and Craig use to accumulate a similar total in their managed RRSP accounts?

    <p>Setting up a spousal RRSP</p> Signup and view all the answers

    What is the benefit of carrying forward RRSP deductions for an individual expecting a significant increase in income?

    <p>To reduce total income in future tax years</p> Signup and view all the answers

    How does contributing to an RRSP help with tax deferral on investment growth?

    <p>Income earned inside an RRSP is tax-sheltered until withdrawal</p> Signup and view all the answers

    How does the ability to apply RRSP contributions to the previous year benefit taxpayers?

    <p>It enables them to carry forward unused deductions to future years</p> Signup and view all the answers

    What is the impact of not deducting RRSP contributions from total income in the current year?

    <p>It allows for carrying forward unused deductions to future years</p> Signup and view all the answers

    Which statement accurately describes the tax implications of withdrawing money from an RRSP?

    <p>Withdrawals are subject to immediate taxation at regular income rates</p> Signup and view all the answers

    If Jon and Craig decide to split their RRSP contributions equally, how much will Jon contribute to a spousal RRSP annually?

    <p>$4,900</p> Signup and view all the answers

    In Canada's progressive tax system, why would a couple earning $50,000 each pay less tax than one person earning $100,000 and the other earning $0?

    <p>Income splitting allows for lower overall tax due to progressive brackets.</p> Signup and view all the answers

    What is the benefit of contributing to a spousal RRSP in the context of Jon and Craig's situation?

    <p>Income splitting for tax benefits</p> Signup and view all the answers

    If Jon and Craig both earn $60,000 annually, what is a potential strategy they could use to maximize their RRSP contributions and tax benefits?

    <p>Splitting their contributions equally between managed and spousal RRSPs</p> Signup and view all the answers

    How does contributing to a spousal RRSP impact the retirement savings of the contributor and the annuitant?

    <p>Both the contributor and annuitant benefit equally</p> Signup and view all the answers

    What is a key advantage of contributing to managed RRSPs rather than spousal RRSPs?

    <p>More control over investment decisions</p> Signup and view all the answers

    What is the primary reason for Jon to continue contributing $4,000 to a managed RRSP instead of allocating it towards a spousal RRSP?

    <p>Higher contribution room in a managed RRSP</p> Signup and view all the answers

    What is the major consideration for an individual over 71 contributing to a spousal RRSP?

    <p>Requirement of earned income for contributions</p> Signup and view all the answers

    What is the primary advantage of splitting contributions between managed and spousal RRSPs instead of allocating all funds to one account?

    <p>Optimization of retirement savings and tax benefits</p> Signup and view all the answers

    How does contributing to an RRSP impact pension adjustments for individuals like Jon and Craig?

    <p>$0 impact on pension adjustments</p> Signup and view all the answers

    More Like This

    RRSP: Registered Retirement Savings Plan
    10 questions

    RRSP: Registered Retirement Savings Plan

    FascinatingAustin avatar
    FascinatingAustin
    Module 2
    35 questions

    Module 2

    InventiveDiction avatar
    InventiveDiction
    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser