A client, aged 40, earns $90,000 per year and has $20,000 in unused RRSP contribution room. They would like to maximize their RRSP contributions for the current year. Assuming the RRSP dollar limit for the current year is $30,780, what is the maximum amount they can contribute to their RRSP this year?

Question: A client, aged 40, earns $90,000 per year and has $20,000 in unused RRSP contribution room. They would like to maximize their RRSP contributions for the current year. Assuming the RRSP dollar limit for the current year is $30,780, what is the maximum amount they can contribute to their RRSP this year?

Answer options:

• $16,200
• $20,000
• $30,780 ✅ $36,200

Correct answer: $36,200

Explanation: The maximum contribution for the current year is the lesser of the current year's dollar limit and 18% of prior year's earned income, plus any unused contribution room. In this case, 18% of $90,000 is $16,200. The client can contribute $16,200 (current year) + $20,000 (unused room) = $36,200, which is less than the current year's dollar limit of $30,780 plus unused room. The actual limit for the current year is the lesser of the current year’s dollar limit ($30,780) and 18% of prior year’s earned income ($16,200), plus any unused room. Therefore the client can contribute $20,000 (unused room) + $16,200 (18% of earned income) = $36,200.