Can I transfer an inheritance to my RRSP?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 3 December, 2002 | 2:00PM

Dear Expert:

I want to get a head start on my RRSP contribution for 2003. I have about $20,000 from an inheritance that I would like to contribute to my plan right away, as I want to get it invested as soon as possible before the stock market goes up. In the past, I have only made a single contribution a few weeks before the deadline, so I am unfamiliar with the rules for early contributions. My 2001 tax return assessment notice says my limit for 2002 is about $6,200. Can I contribute the entire $20,000 now but deduct the excess $13,800 in future years, as my RRSP limit permits?

Expert Opinion:

Any contributions you make to your RRSP above your 2002 contribution limit of $6,200 will attract a penalty tax of 1% per month to the extent that excess is greater than $2,000. As a result, you should consider contributing $8,200 today and contributing the balance of the $20,000 in January 2003 when new contribution room will open up based on your 2002 earned income. The new room for 2003 is generally equal to 18% of your employment income for 2002, less any pension adjustment.

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Jamie Golombek

Jamie Golombek