Question

Jean and Dan both work. Each earns a salary of $45,000, but only Jean is a member of a registered pension plan. Both she and her employer contribute 3 percent of her gross salary to a defined contribution pension plan. Jean has no unused RRSP room carried forward as she has maxed out her RRSP each year. Dan has $15,000 of unused RRSP contribution room carried forward showing on his Notice of Assessment. Calculate the maximum RRSP contribution that each can make this year. (Omit the "$" sign in your response.)

Answer 1

Jean can make a maximum RRSP contribution of $1,350 this year, while Dan can make a maximum RRSP contribution of $16,350.

Step-by-step explanation:

To calculate the maximum RRSP contribution that each can make this year, we need to consider their individual circumstances. First, let's calculate the maximum contribution for Jean:

3% of Jean's gross salary = 0.03 × $45,000

= $1,350

Since Jean has maxed out her RRSP each year and has no unused room, her maximum RRSP contribution will be $1,350.

Now let's calculate the maximum contribution for Dan:

Since Dan has $15,000 of unused RRSP contribution room carried forward, his maximum RRSP contribution would be his unused room plus his current year's contribution:

$15,000 + $1,350

= $16,350

Therefore, Jean can make a maximum RRSP contribution of $1,350 this year, while Dan can make a maximum RRSP contribution of $16,350.