TL;DR:
Over‑contributions can trigger a 1% monthly penalty on the excess amount. Track your room, contribute gradually, and check CRA My Account for your official limit.

What counts as an RRSP over‑contribution?

You’ve over‑contributed if the amount you add to your RRSP exceeds your available contribution room.

Your room is based on:

• 18% of last year’s earned income (up to the annual max)
• Unused room carried forward
• Reduced room if you have a workplace pension

How RRSP penalties work

CRA charges 1% per month on the excess amount.

There is a small allowed buffer, but anything beyond that can be penalized. The longer it stays, the bigger the penalty.

Common reasons people over‑contribute

• Not accounting for employer pension adjustments
• Forgetting previous contributions
• Contributing too early without checking room
• Confusing RRSP transfers with new contributions

How to avoid RRSP penalties

• Check your official room in CRA My Account
• Track contributions in one place
• Contribute gradually if you’re near the limit
• Keep a small buffer if you’re unsure

What to do if you already over‑contributed

1. Withdraw the excess amount
2. Document the correction
3. Wait for CRA to update your room
4. File any required forms and pay penalties if needed

Fixing it quickly reduces the penalty.

When a calculator helps

An RRSP contributions calculator can help you plan your annual contributions and see how much room you have left. It’s a planning tool — CRA is the official source.

Final note: This is education and planning — not financial advice. Always confirm your official RRSP contribution room in CRA My Account.