Mechanical answer on excess RRSP contributions

[clinkletter1]

I thought that my FY22 RRSP contribution limit was based on calendar year 2022. However, I have learned that it is not and so I have contributions I need to report from January 1, 2022 to March 1, 2023 and the total of those is about $3,038 over my limit. Some of the excess contribution over $2k was made in this month, February 2023.

What are my best options right now to get ahead of this? Do I withdraw the amount in excess of $2,000 right now and on my tax return indicate that I over contributed or do i indicate just the amount of the over contribution after my withdrawal ($2,000 or less)?

In terms of my wtihdrawal, Let's say I take out ~$1,000. Will there be a 10% withholding tax on that amount that I can then claim as "taxes paid" for my 2023 return?

Overall just looking for the best strategy to do this right now and all the necessary paperwork that needs to be filed to be in compliance.

Thank you

[TurboTaxSusan]

Yes, you should take out the over-contribution amount as soon as possible.

Then you will need to fill out and mail T1-OVP 2022 Individual Tax Return for RRSP, PRPP and SPP Excess Contributions to report the extra contribution and calculate your penalty. This form is not available in TurboTax.

[clinkletter1]

I think we may actually be OK on this. I was counting DPSP and DCPP contributions (company matches) but it sounds like that just would lower my 2023 deduction limit then. Because of that, I am now well within range. Is that correct?

[TurboTaxSusan]

Your DPSP contributions for 2022 would be included in your Pension Adjustment calculation, which would reduce your 2022 RRSP limit. You can see your Pension Adjustment Box 52 of your T4.

You may want to call the Canada Revenue Agency (CRA) to sort this one out. If you are in Canada or the United States, you can call the CRA at 1-800-959-8281. If you are elsewhere, you can call 613-940-8495. This page has more ways to contact the CRA: Contact the Canada Revenue Agency