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What is the relationship between the DG Pension Plan and my RRSP contributions?
Tax laws take into account the pension you are accumulating in the DGPP (defined benefit plan) in order to set a ceiling for tax-deductible RRSP contributions.
In 2023, Plan members will generally be able to make the following RRSP contributions:
+
- |
Unused contribution room prior to 2022
18% of earned income* in 2022 or maximum $30,780
Pension adjustment (PA) for 2022 |
The Pension Adjustment appearing in box 52 of your T4 slip corresponds to the value of the vested pension in the DGPP during the taxation year, i.e.:
PA = (9 X year’s pension) - $600
Example : addition to the contribution room for 2023
| 2022 salary
| =
| $45,000
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|
|
| 18% of earned income ($45,000 X 18%)
| =
| $8,100
| Minus : Pension adjustment (PA) (9 X $6751) - $600
| =
| $5,475
| RRSP contribution* allowed for 2023 (in addition to the unused contribution room of prior years)
| =
| $2,625
|
1Year's pension (calculated with the 2022 salary) = $675
In case of termination in the DGPP before age 55 and the transfer of the value of your vested pension to a locked-in account, a verification of the pension adjustment (PA) is made. If the sum of the declared PA for the years after 1990 is higher than the value of the pension, a pension adjustment reversal (PAR) is sent to the former participant, which gives him unused contribution for his RRSP from the year of his termination.
* As a Desjardins Group employee, you can usually calculate your 2023 RRSP contribution limit based on your 2022 salary, if it's your only earned income.
2022 salary
|
2023 RRSP contribution room
| Less than $4,444
| 18% of your 2022 salary
| $4,444 to $64,900
| $600 + 4.5% or your 2022 salary
| $64,900 to $171,000
| $3,521
| $171,000 to $187,225
| $34,301 minus 18% of your 2022 salary
| More than $187 225
| $600
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