If you have been a member of a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP), you have had your annual RRSP deduction limit reduced by a figure called the pension adjustment. This figure is reported on your T4 slip for each year you are a member of an RPP or DPSP.

If you exited from an RPP or DPSP in 2007, it may cause a downward change to the pension adjustment figures previously reported to you regarding that plan. The revision is called a Pension Adjustment Reversal (PAR). This will adjust your 2007 RRSP deduction limit upward.

A PAR would be reported to you if your pension benefits were not vested, or if the lump sum you were able to transfer from the RPP or DPSP to your own RRSP was less than the pension adjustment figures previously reported to you.

The PAR for those who leave an RPP or DPSP should be reported to them within 60 days after the end of the calendar quarter (or January 31 if the termination occurs in the fourth quarter of the calendar year) in which they cease to be a plan member.

Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.