What happens if I overcontributed to my RRSP?

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

Gena Katz 18 February, 2003 | 2:00PM

Dear Expert:

I had RRSP contributions made automatically from my bank account, but somehow I overcontributed by $1,900 during the past year. What happens now?

Expert Opinion:

If this is your only RRSP overcontribution, nothing happens. An individual is permitted to have a cumulative RRSP overcontribution balance of up to $2,000 without penalty. Overcontributions beyond this level are subject to a penalty tax of 1% per month as long as they remain in the plan. Although you cannot claim your overcontribution as a deduction for this year, you may use it toward your contribution room for next year.

To find out how much an RRSP contribution may save you, try Morningstar's RRSP Calculator.

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Gena Katz

Gena Katz