There are limitations to how much you can contribute on an annual basis to your RRSP! You may annually contribute whichever is lower of the following:
- 18% of your pre-tax earned income from the previous year or;
- A maximum of $27,830 (2021)
- The remaining limit after any company-sponsored pension plan contribution
Note: Any unused contribution room from 1991 onwards can be carried forward to the current year.
Every Canadian is allowed to over-contribute $2,000 once in their lifetime, but if you over-contribute beyond this amount, you'll be charged a penalty tax of 1% of the over-contribution amount per month.
If you're not certain what available contribution room you have, we highly recommend setting up a MyCRA online profile.