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Budgets and Government Plans

Q

Registered Plans: 2003 Budget - How do the proposed increases to the limits on tax-assisted retirement savings affect RRSPs, DPSPs and RPPs?

A

It is proposed that the money purchase limit be increased to $15,500 for 2003, $16,500 for 2004 and $18,000 for 2005. For 2006 and subsequent years, the money purchase limit will be increased by increases in the Average Industrial Wage. This will permit increased contributions to money purchase pension plans and DPSPs starting in 2003 provided plans permit the higher contribution.

The defined benefit limit will continue to be the greater of $1,722.22 and 1/9 of the money purchase limit. As a result, the defined benefit limit will be $1,722.22 for 2003, $1,833.33 for 2004, $2,000 for 2005 and 1/9 of the money purchase limit for subsequent years.

The RRSP dollar limit will be $14,500 for 2003, $15,500 for 2004, $16,500 for 2005 and $18,000 for 2006. For 2007 and subsequent years the RRSP dollar limit will be increased by increases in the Average Industrial Wage. The RRSP dollar limit is used in determining an individual's unused RRSP room.

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Please Note: Any information provided in response to an HR or payroll question is not legal advice or a legal opinion. To obtain legal advice or a legal opinion, consult a lawyer.

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