Q. Can I make a RRSP contribution if my RRSP matures in 2012?
A: Taxpayers generally wait until March 1st to contribute to their RRSP based on their contribution limit for the prior year.
If you must convert your RRSP to a RRIF or another eligible vehicle by the end of the year because you attained age 71 in 2012, you can’t contribute to your RRSP after December 31st. This means that any new contribution room created on January 1st as a result of your 2012 earned income may not be contributed to your RRSP in 2013.
On January 1, 2013, you may have created additional RRSP contribution room if you had earned income in 2012. Earned income may include employment or self-employment income or net rental income. The new room is equivalent to 18% of your 2012 earned income, less your pension adjustment (noted on your 2012 T4 slip) if you are a member of a registered pension plan.
Compute your additional RRSP room by taking into account the January 1st increase. If you contribute the 2013 additional limit in December 2012, you have an over contribution subject to a 1% penalty but no tax deduction until 2013. In January 2013, there is no penalty because you now have the RRSP contribution room. Therefore you get the tax benefit based on your marginal tax rate for a 1% fee.
Going forward, if you continue to create contribution room because you may realize some earned income, you may make a contribution and claim a deduction on your tax return by contributing to your spouse’s RRSP by March 1st, provided the spousal contribution is made by the end of the year in which your spouse attains age 71.
You should consult with your professional advisor on all related matters