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Pensions

Pension Adjustment (T4 Box 52) Explained

The pension adjustment in box 52 of your T4 is the value of the pension benefits you earned that year in a registered pension plan or deferred profit-sharing plan. The CRA uses it to reduce your RRSP deduction limit for the next year. You don't enter it on your return.

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Why it exists

It keeps savings fair between people with workplace pensions and people who only have RRSPs: the more pension you earn at work, the less RRSP room you get.

How it's calculated

  • Defined contribution and deferred profit-sharing plans: generally the total contributions made for you in the year.
  • Defined benefit plans: based on a formula for the value of the pension you earned.

If the calculated amount is zero or negative, box 52 is left blank.

Where you see the effect

Your new RRSP deduction limit appears on your latest notice of assessment and in CRA My Account.

Related

RRSP and Your Taxes: Deductions, Withdrawals and Withholding Tax RRSP contributions reduce your taxable income, up to your deduction limit shown on your notice of assessment. Withdrawals are taxable, and your bank withholds 10% (up to $5,000), 20% ($5,000 to $15,000) or 30% (over $15,000) outside Quebec. The Home Buyers' Plan and Lifelong Learning Plan let you withdraw without paying tax if you repay. Defined Contribution Pension Plans in Canada Explained In a defined contribution (money purchase) pension plan, you and usually your employer put money into your own account, and your retirement income depends on how much goes in and how the investments perform. The pension amount isn't known until you retire, unlike a defined benefit plan, which promises a set formula. CRA Tax Slips and Forms Explained: T1, T4, T4A, T5 and More The T1 is your income tax and benefit return. Slips report income to you and the CRA: T4 for employment income, T4A for pensions and other income, T4A(P) for CPP, T4A(OAS) for Old Age Security, T4E for Employment Insurance, T5 for investment income and T3 for trust income. Copies of most slips are in CRA My Account.

Sources

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