The RRSP system allows you to accumulate room each year over a lifetime and use it as you see fit and can afford to make the contributions. “Unused contribution room” measures what you can contribute to an RRSP in any given year. It is calculated as last year’s room plus:
the lesser of
- Deductions claimed in the previous year
- Your pension adjustment for the previous year
- You can no longer contribute to an RRSP after December 31st of your 71st year. If you continue to generate contribution room because, (for instance):
- You continue to work
- You have rental income
- You sold a rental property and generated a depreciation recapture
- You receive alimony
…then, you should either make spousal contributions (if your spouse is under age 71) or make a final contribution into your plan at age 71 before you collapse the RRSP.
- Our RRSP system is a life-time program. It is expected that young people will build up unused contribution room because they cannot afford to live, save for a house, raise a family and put money aside for retirement all at the same time. As their incomes rise, living costs drop or inheritances come their way, they may be able to catch up the unused contribution room later in life.