Can I transfer my retiring allowance into my RRSP?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 23 June, 2003 | 1:00PM
Dear Expert:

I will retire later this year. My retiring allowance will be $10,000 but I have no room in my RRSP to make contributions for 2003 or 2004. Can I still transfer my retiring allowance to my RRSP, or do I have to pay income taxes of these funds?

Expert Answer:

The amount of retiring allowance that can be transferred/contributed to an RRSP is above and beyond your regular annual contribution limits based on earned income and pension adjustments. The maximum that can be transferred to your RRSP is:
  • $2,000 for each full year prior to 1996 during which you were employed by the employer paying the retiring allowance; plus

  • $1,500 for each full year prior to 1989 for which employer contributions to an RPP or DPSP have not vested.

If the permitted retiring allowance amount is transferred directly to your RRSP there will be no withholding tax. If your retiring allowance exceeds the amount eligible for transfer to your RRSP, the excess is taxable to you in the year received.

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Gena Katz

Gena Katz