Made Money When You Were 71? Over Contribute To Your RSP And Minimize Your Penalty
According to Burlington-based Accountant Colin Gray, one area that has recently been getting some attention is RRSP contributions for people reaching the age of 71, when they need to transition to a Registered Retirement Income Fund (RRIF). “RRSPs were introduced in 1957 and the government never imagined people would still be working at 71! But that is more common now”, says Gray. If you have earned income while you’re aged 71, RRSP room can be generated, but you can’t make a contribution the following year. The solution? Over-contribute when you’re 71, take the 1% penalty, and claim a deduction the following year.
“This is happening more often,” Gray says. “They are paying a penalty but it’s a good penalty”.
FPM Magazine April 2014