--- title: Empire Life Blog RRSP contributions for working seniors description: RRSP deductions after age 71? Here are 3 options to consider for working seniors image: https://blog.empirelife.ca/hubfs/Blog_images/INV-Blog-images/RRSP-Contributions-For-Working-Seniors.jpg --- × #### Subscribe ### Subscribe to Email Updates Signing up for our Blog offers you the opportunity to subscribe and receive email notifications for Investment or Insurance type content only from The Empire Life Insurance Company and Empire Life Investments Inc. You may cancel your subscription to the newsletter at any time by clicking on [unsubscribe](http://www.fastandfull.ca/hs/manage-preferences/unsubscribe-simple) or, by contacting The Empire Life Insurance Company or, Empire Life Investments Inc. **The Empire Life Insurance Company** 259 King Street East, Kingston, Ontario K7L 3A8, Canada Toll Free: 1 800 561-1268 Email: insurance@empire.ca or investment@empire.ca **Empire Life Investments Inc.** c/o 259 King Street East, Kingston, Ontario K7L 3A8, Canada Toll-free telephone: 1 855 823-6883 Email: mutualfund@empire.ca Close [Facebook](https://www.facebook.com/Empire-Life-Insurance-142465432433812/) [Linkedin](https://www.linkedin.com/company/empire-life-investments) [Twitter](https://twitter.com/empirelifeins) Subscribe [EN](https://www.empire.ca/blog) | [FR](https://empire.ca/fr/blogue) [![Empire Life | Empire Life Investments](https://blog.empirelife.ca/hubfs/Logo/Combined%20Blog%20Images/combined-logo.png)](https://www.empire.ca/blog) # Insurance, Investments and Group Benefits ## Navigate life with confidenceTM - Insurance - [Insurance](https://www.empire.ca/blog/topic/insurance) - [Helpful Tips](https://www.empire.ca/blog/topic/helpful-tips) - [Customer Service](https://www.empire.ca/blog/topic/customer-service) - Investments - [Investments](https://www.empire.ca/blog/topic/investments) - [Investment Views](https://www.empire.ca/blog/topic/investment-views) - [Off the Cuff](https://www.empire.ca/blog/topic/off-the-cuff) - [Group Benefits(1)](https://www.empire.ca/blog/topic/group-benefits) - [Personal Finance (1)](https://www.empire.ca/blog/topic/personal-finance) ## [RRSP contributions for working seniors](https://blog.empirelife.ca/blog/rrsp-contributions-for-working-seniors) [Investments](https://blog.empirelife.ca/blog/topic/investments), [Personal Finance](https://blog.empirelife.ca/blog/topic/personal-finance) Posted by [Peter Wouters](https://blog.empirelife.ca/blog/author/peter-wouters) Feb 15, 2018 10:30:00 AM Directeur, Planification fiscale et successorale et planification de la retraite, Gestion de patrimoine Placements Empire Vie ![RRSP-Contributions-For-Working-Seniors.jpg](https://blog.empirelife.ca/hs-fs/hubfs/Blog_images/INV-Blog-images/RRSP-Contributions-For-Working-Seniors.jpg?width=806&height=537&name=RRSP-Contributions-For-Working-Seniors.jpg)Stan is turning 71 this year. He is enjoying a life filled with travel, relaxation and time with his family. Like more and more people, work is still very much a part of his life. Stan expects to work at least part-time for the foreseeable future. To Stan, this keeps his mind active and helps define who he is. He would like the opportunity to claim Registered Retirement Savings Plan (RRSP) deductions after age 71 even though he knows he must mature his own plan by the end of the year he turns age 71. What are his options? #### **One thing that Stan can do is contribute to a spousal RRSP...** One thing that Stan can do is contribute to a spousal RRSP until his spouse, Nelly, reaches age 71. His contributions are limited to 18% of his previous year’s earned income. Those deposits to Nelly’s plan do not affect Nelly’s ability to contribute to her own plan provided she has earned income or unused contribution room. Stan gets to take advantage of tax deductible contributions. Nelly benefits from asset splitting now, since she gains from the tax sheltering in her Registered Retirement Savings Plan. The couple benefits from income splitting later since Nelly declares the income from the plan when it matures, either in the form of an annuity or a Registered Retirement Income Fund. #### **He could consider an over contribution to his own RRSP.** Stan has always maximized his Registered Retirement Savings Plan contributions. He could consider an over contribution to his own plan. He can make excess contributions to his Registered Retirement Savings Plan before he matures his plan by the end of the year in which he turns age 71. Stan has earned income this year of $80,000. That means he will have $(80,000 x 18%) = $14,400 of contribution room next year. Stan can contribute next year’s contribution room in December of this year, just prior to maturing his Registered Retirement Savings Plan. This strategy will result in a penalty for the month of December to the extent that his excess contribution is over $2,000. Taxpayers are allowed a $2,000 over contribution without penalty. The penalty is 1% per month. Specifically, Stan will be charged an over contribution penalty of $(14,400-2,000) x 1%=$124. #### **Taxpayers are allowed a $2,000 over contribution without penalty.** Stan’s over contribution scenario vanishes on Jan.1st of next year because he will be entitled to $14,400 of contribution room based on his prior year’s earned income. The deduction more than offsets the comparatively small penalty. The Registered Retirement Savings Plan deposit can either boost his annuity income or his Registered Retirement Income Fund (RRIF) balance, with most of that extra money enjoying some ongoing tax sheltering. What else does Stan need to do? He will have to file Form T1-OVP which will report his over contribution to the Canada Revenue Agency (CRA). He needs to file the form and pay the penalty 90 days after the end of the current year.   © 2019 by Peter Wouters. Republished with permission by Peter Wouters. For the complete list of articles, please visit **[here](https://www.linkedin.com/in/peter-wouters-14ab76/detail/recent-activity/posts/)**. --- This blog reflects the views of the author as of the date stated. This information should not be considered a recommendation to buy or sell nor should it be relied upon as investment, tax or legal advice. 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