RRSP Contribution Room Calculations for US Commuter

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RRSP Contribution Room Calculations for US Commuter

Post by lipeter1 » Thu Aug 01, 2019 4:36 pm

I am a Canadian resident who commutes to the US to work for a US employer. I have contributed to their 401(k) plans. It is a money purchase plan, and my employer also matches 50% of my contributions up to a maximum of 3% of my salary.

I just spent a whole lot of time talking with CRA agents, and was a bit shocked by their instructions on how to calculate my RRSP contribution room.

Assuming I contributed $5000 to my 401(k) plan, and my employer matches $2500. The CRA told me to enter the following:

- Form RC268, Box 5125: $5000
- Form RC268, Box 5123: $2500
- T1, Line 206: $2500
- T1, Line 207: $5000

The CRA agent me that my RRSP Contribution Room is reduced by the amount on line 206 ($2500) and is unaffected by the amount on line 207. I am shocked because I have $5000 pre-tax dollars sitting in a tax shelter, but only $2500 of my contribution room is reduced. Does this make any sense? Can I purchase another $2500 in RRSPs?? I am worried about over-contributing.

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