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.
This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.
Moderator: Mark T Serbinski CA CPA
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