Can You Contribute to Your RRSP After Age 71?

Ask MoneySense

My CRA RRSP deduction limit shows I have contribution room of $25,051. But my wife and I have RRIF accounts as we’ve already turned 71. Should I ignore this RRSP contribution limit?

—Bob

Your annual notice of assessment (NOA) and your Canada Revenue Agency (CRA) My Account both list your registered retirement savings plan (RRSP) contribution room. The CRA reports your RRSP room regardless of age, so whether you’re young or well into retirement, your NOA and online account will show any remaining deduction limit.

Your RRSP contribution limit after 71

It’s understandable to be confused, especially if you and your spouse converted your RRSPs to registered retirement income funds (RRIFs). RRSPs must be converted to RRIFs or used to purchase an annuity by December 31 of the year you turn 71. Even after that conversion, the CRA will still display any RRSP contribution room on your NOA and in My Account.

For most people older than 71, that reported RRSP room is essentially unusable. In general, you cannot make RRSP contributions for yourself once you’ve reached the end of the year you turn 71. That said, there are a couple of exceptions and nuances to be aware of.

Contributing to spousal RRSPs

If your spouse is 71 or younger, they can open and hold a spousal RRSP. A spousal RRSP is owned by one spouse — typically the lower-income or younger partner — but can be funded by the other spouse. You can contribute to a spousal RRSP using your own RRSP deduction room, even if you are older than 71, provided the spouse who owns the spousal RRSP is under the age limit. When you make such contributions, you claim the deduction on your tax return; the spouse who owns the account will be the one to withdraw in the future.

Can you have an RRSP and a RRIF at the same time?

Yes. Converting an RRSP to a RRIF applies only to the specific RRSP account you choose to convert. You can hold multiple registered accounts, and it’s not necessary to convert every RRSP you own at once. That means you can have both RRSPs and RRIFs concurrently. In some cases, if you are 71 or younger, you can even transfer RRIF funds back into an RRSP, though this is uncommon.

Because you can maintain multiple accounts, one reason to contribute to an RRSP after having converted other accounts to RRIFs would be if you experienced a temporary spike in income or had excess cash and wanted to claim an RRSP deduction. Otherwise, the practical need to contribute after conversion is limited for most retirees.

Unused RRSP contributions and carry-forward rules

You can contribute to an RRSP up until the end of the year you turn 71 and choose to carry forward the deduction for use in a later tax year. Those unused RRSP contributions may be deducted in future years with no age restriction on when the deduction can be claimed. This carry-forward flexibility exists because RRSP contribution room and the decision of when to claim the deduction are separate matters.

In practice, most Canadians claim the deduction in the year the contribution is made to secure a tax refund or to reduce taxable income immediately. Delaying the deduction to a future year can make sense in specific situations — for example, if you anticipate a much higher taxable income later (from a property sale or other event) and expect to be in a higher tax bracket — but generally the time value of money favors taking the tax benefit sooner rather than later.

What this means for you

In your situation, Bob, the RRSP deduction limit shown by the CRA is accurate but likely irrelevant. Since both you and your wife are past the year you turned 71, you cannot make RRSP contributions for yourselves. The CRA will continue to list any remaining RRSP room on your NOA and online account indefinitely — a quirk of the reporting system that applies to all taxpayers, regardless of age.