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When to contribute?
January 20, 2015
12:09 pm
Save2Retire@55
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Hello everyone,

Considering March 2nd is the last day to contribute to RRSP, I am wondering, if I write a check and date it March 1st or simply make an online transaction dated March 1st (which is Sunday), would that be considered toward my 2014 RRSP contribution?

The confusion is due to the lateness before a cheque can be cleared and money transferred from one financial institute to the other knowing I will transfer between two different institute.

Simply what date is considered the date of contribution?

Thank you,

January 20, 2015
12:51 pm
Doug
British Columbia, Canada
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Yas,

March 2nd, 2015, is indeed a Monday; however, it depends on when you anticipate the institution receiving, and processing, your RRSP contribution. There are likely provisions that allow the institution to "back-date" transaction(s) to the date of the cheque but that institution would likely be under no obligation to do so.

So, technically, while they may have the legal authority to "back-date" the processing date on an RRSP contribution, they don't have to. Particularly since there is absolutely no rationale to contributing on the last day, unless that might be a payroll date (of which Monday is not) and your employer's matching RRSP contribution would be included, I see no reason whatsoever to wait until then. With TFSAs, there is an advantage of withdrawing the funds on Dec. 31st and re-contributing on Jan. 1st of the following year, to avoid TFSA transfer fee(s).

In short, both date(s) can be considered the date of contribution - it's basically up to the financial institution as of them have provision(s) within their RSP Declaration of Trust and other account agreement(s) that state the date on a cheque or postmark on an envelope may not necessarily be the processing date of the RRSP contribution and they don't have to "back-date". To try and insist on this would be like "playing with fire" just to potentially start a "cat fight" with your financial institution. Makes no sense to me! :)

To play it safe, I would always make my RRSP contribution (if waiting until the last minute) on a Friday of the immediately preceding week of the last RRSP contribution date (in this case, Feb. 27th), if not sooner.

Hope that helps,
Doug

January 20, 2015
12:59 pm
Save2Retire@55
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Thanks for your reply Doug :)

January 20, 2015
2:46 pm
Norman1
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I don't think the date on the cheque matters, unless it is post dated. Also, it may not be up to the RRSP issuer to decide on a date other than the date that it actually received your cheque and paperwork.

Income Tax Act, subsection 146(5), requires the contribution to be made "by the taxpayer after 1990 and on or before the day that is 60 days after the end of the year." Is the contribution made (a) when I mail it, (b) when Canada Post gets around to postmarking it, or (c) when the RRSP issuer actually receives it? I don't know.

If I absolutely had to make my RRSP contribution on the last day, I would personally visit the branch or office during their business hours, with the cheque and paperwork, and have it processed on the spot. That way, there would be no question about when I made the contribution.

I agree with Doug and would try to make any RRSP contributions well before the last day.

January 20, 2015
5:14 pm
JustMe
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You did contribute to RRSP when money appears on your RRSP account. I would not play with initiating transfer on 1.3.
Ideal time to contribute is when you get notice of assessment. That way your money grow from March/April THIS year and not Next year. Of course, it is not exactly possible as many have RRSP paycheque deduction in their companies...

January 21, 2015
7:10 am
Save2Retire@55
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Referring to your recommendations, I am going to do the transfer during second week of February. No need to take any risk. Thanks again :) Yas

January 21, 2015
9:30 am
Doug
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Yas said

Referring to your recommendations, I am going to do the transfer during second week of February. No need to take any risk. Thanks again :) Yas

Good plan, particularly if you are sending by mail. If you are making the contribution in-person at a financial institution, since the deposit/contribution would be made same-day via an institution's suspense account, and thus you would receive same-day credit, you can probably safely make the contribution on Feb. 27th. As far as online banking or pre-authorized payment (EFT) contributions, I would make it by Feb. 25th or Feb. 26th, at the latest, to be very safe. But yeah, sending via mail, posting it by mid-February would be a good plan. :)

And to the earlier poster's post, it basically can be either (b) or (c), fortunately or unfortunately.

Hope that helps,
Doug

January 21, 2015
5:52 pm
Save2Retire@55
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Thanks Doug / others, It's going to Questrade so there is no in person option. Surely, your input is very helpful. Cheers, Yas

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