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What is a Pension Adjustment?
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% {# T, }! P$ d% Q5 P+ \ {9 ~6 }A pension adjustment or PA is an amount that reduces the RRSP deduction limit of persons who are in a company-sponsored registered pension plans. This is an attempt to equalize the various tax deferred savings programs in Canada and ensure that persons who participate in a company pension plan do not have the same level of RRSP contributions as those who do not. / p) B- U; T; c4 Q# n
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Thus, persons who are not in a pension plan do not have a pension adjustment. Those who participate in a registered pension plan or a deferred profit sharing plan have a pension adjustment reported for each year of participation on their T4 slip (Statement of Remuneration Paid). The pension adjustment reported in a calendar year reduces allowable contributions to an RRSP for the next calendar year.
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) ?# h8 q# P B% v" I$ cThe PA is the amount contributed by an employee and/or employer to an employee account in a defined contribution pension plan or deferred profit sharing plan, or the deemed value of pension benefits accrued during the year in a defined benefit pension plan. ' V- B [" w& i4 D8 d' Y
( H% x+ e' I3 R/ h7 ~% Z8 QIf a person is a member of a defined benefit pension plan, the PA is equal to nine times the benefit accrued during the year less $600. For example, a person who earned $40,000 would be able to contribute $7,200 or18% of earnings to the RRSP in the following year if there were no company pension. However, if the person earned a pension of, say, $500 last year in a company pension plan, then there would be a PA of $3,900 (9 times $500 less $600). The PA reduces the maximum allowable RRSP contribution to $3,300 ($7,200 less $3,900).
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发表于 2015-2-21 00:07
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