If you haven’t maxed out your RRSP in the past, then you surely have unused contribution room. Take advantage of your unused contributions to increase the value of your RRSP. If you don’t have the cash required, start making regular instalments, and you’ll see, you’ll soon catch up your unused contribution room.
Borrowing to contribute to your RRSP could also be a profitable method that doesn’t unbalance your budget. This strategy is quite effective when you apply your tax return to your loan*.
Use your unused contribution room
Did you know that if you did not make your maximum RRSP contribution this year, you will have unused contribution room that you can use next year?
In fact, you are allowed to contribute 18% of your income into an RRSP. If you can’t, you can use your unused contribution room in subsequent years.
For example, if your maximum contribution for a year is $12,000 but you only contribute $2,000 to your RRSP, you may use the unused $10,000 portion to increase your contribution the following year for a total of $22,000. This way, your unused contribution room lets you exceed your maximum annual limit.
If you should come into some money unexpectedly (inheritance, lottery winnings, etc.), it may be wise to use your unused contribution room. In some cases, you can even borrow to do so.