5 tips and tricks that you need to know about RRSPs:

1. For 2020 tax season, the RRSP deadline is March 1, 2021. Any RRSP contribution that you want to make to use for your 2020 taxes must be contributed prior to March 1st of this year.

2. Your RRSP contribution limit every year is 18% of your earned income. There is, however, a maximum. In 2020, the maximum was $27,230; if 18% of your earned income is higher than $27,230 you will be capped at the maximum. Your contribution limit also includes carryover from previous years...you can find if you have any additional contribution room on your notice of assessment.

3. Pension plans will affect your contribution room. Any contributions through a pension plan will decrease your RRSP contribution room; if you aren't sure if you have a pension adjustment, on your T4 slip it'll be in box 52, and on your T4A slip it'll be in box 34.

4. You can carry forward your RRSP contribution for a tax deduction indefinitely. An RRSP contribution in the 'now' doesn't mean you have to use the deduction in the 'now'

5. You can have a lifetime over contribution of $2,000...above $2,000 and you'll have a 1% monthly penalty. It may be useful to use that $2,000 over contribution room if you are nearing retirement as your tax rate will be going down.

Bonus tip: Reinvest your tax refund. Now, if you have high interest debt or other pressing bills that need to be addressed, it is of course wise to use your refund for those items. However, if you don't have a specific plan for that money, reinvest it, and let compound interest do it's thing!
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