Question

Wally is a member of a contributory DCPP to which Wally and his employer each contribute 6% of his salary each year. Wally made $84,000 in 2022 . What is the maximum Wally's company can contribute to a DPSP for Wally in 2022?

Answer 1

To calculate the maximum contribution, consider the maximum annual contribution limit for a DPSP based on a percentage of the employee's previous year's earned income. However, the actual maximum contribution cannot exceed a specified amount, such as $29,210 in 2022. Consult CRA guidelines or a financial advisor for accurate calculations.

Step-by-step explanation:

To calculate the maximum contribution that Wally's company can make to a DPSP (Deferred Profit Sharing Plan), we need to know the maximum annual contribution limit set by the Canada Revenue Agency (CRA).

In 2022, the maximum annual contribution limit for a DPSP is based on 18% of the employee's previous year's earned income. However, the actual maximum contribution limit cannot exceed $29,210. So, if Wally had a salary of $84,000 in 2022, the maximum his company can contribute to a DPSP for him is $29,210 (since 18% of $84,000 is $15,120, which is less than $29,210).

Please note that the calculation may vary depending on any additional factors or specific plan rules. It is always advisable to consult the CRA guidelines or a financial advisor for accurate calculations and information.