Severance and RRSP

[armtamz]

Hello folks!

I need help:

- i lost my job in November 2019
- i was offered a 5 month severance pay
- the lump sum was transferred directly to my RRSP in January 2020, upon request (therefore, the gross amount, without withholding taxes).

My questions are as follows:
- should i be getting a contribution slip for this amount (for the period of first 60 days of 2020)?
- if so, can i include this in my 2019 income tax return and expect a substantial deduction?
- is it safe to say that the lump sum will appear as income in my 2020 T4?

cheers

[TurboTaxHeba]

This severance package was part of your income in your 2029 T4 slip since it was paid in a lump sum and commonly reported in:

• Box 14
• Box 66 or,
• Box 67

Since you have contributed the amount in your RRSP the first 60 days of 2020 > you will be able to deduct it in your 2019 tax return. The financial institution should have issued you a slip for this contribution.

If it is reported in Box 66 > you can do a direct transfer to your RRSP without reducing your RRSP contribution limit. You will need a letter from the employer to prove that it was a direct transfer.

If it was reported in any other Box > you must have enough room in your RRSP to contribute this amount. > it will reduce your RRSP limit 

The amount contributed will be deducted from your income on Line 208 and you will end up paying less taxes for 2019. 

I hope this was helpful