Asha Okoye is 35 and single, and had earned income of $57,000 in 2019 and $62,000 in 2020.Asha's pension adjustment (PA) in 2019 was $3,500 and in 2020 the PA was $4,000.Asha's 2019 Notice of Assessment showed unused RRSP room of $8,000.How much can Asha contribute to an RRSP for the 2020 taxation year?
A)$10,260
B)$14,760
C)$15,160
D)$27,230

Question

Quizplus · Accepted Answer

Asha's RRSP contribution limit for the 2020 taxation year is calculated as follows: The RRSP contribution limit is 18% of the previous year's earned income, up to a maximum limit set by the government, minus the previous year's pension adjustment (PA), plus any unused RRSP room from previous years. For 2020, the calculation is 18% of her 2019 earned income ($57,000) which is $10,260, minus her 2019 PA ($3,500), plus her unused RRSP room from the 2019 Notice of Assessment ($8,000). Therefore, $10,260 - $3,500 + $8,000 = $14,760.

Asha Okoye Is 35 and Single, and Had Earned Income