What happens if you go over your rrsp

Question

What happens if you put to much money in your rrsp so that i go over my limit

Answer 1

If you exceed you RRSP limit by more than $2,000, you are subject to an extra tax on the excess contributions. The tax is steep; one percent per month for the time the money is inside the RRSP. Once you remove the excess contributions from the RRSP, you are no longer subject to this tax.

In order to calculate this tax, you must file a special tax return. The forms are available at the CRA web site under Form number T1-OVP. There is a due date for the return, and if you don't file it on time you are also subject to Late filing penalties and interest.

Check out CRA publication T4040 for more information.

Answer 2

You are actually allowed to go over your limit by $2,000.00 without incurring any penalties.

If you go over by more than $2,000.00, you must remove any excess from your RRSP.  

Answer 3

You have to remove it.  If you do not remove it, there are financial penalties (fines) until you do.  In any event, you certainly don't get to deduct more than the yearly limit, and you are going to (one day) be taxed on the entire amount withdrawn, so by leaving it in there, you'd be taxed twice on the same money.