How buying service might change your RRSP contribution room

You can buy service using cash, RRSP transfer or a combination of both. However, if you are buying service, and the resulting past service pension adjustment (PSPA) is greater than your available RRSP contribution room, you may have to make a qualifying withdrawal from your RRSP.

In some cases, you may also make a qualifying transfer—a direct transfer of funds from your RRSP to the plan that does not affect your RRSP contribution room.

The final PSPA amount can only be determined after we receive payment. We’ll submit the PSPA to the Canada Revenue Agency (CRA) to certify your RRSP contribution room.

CRA will contact you in writing if you must make a qualifying withdrawal or qualifying transfer. If you decide not to make a qualifying withdrawal or qualifying transfer, you must notify both CRA and the Municipal Pension Plan.

In some situations, CRA may allow you to over-contribute to your RRSP. If you are considering buying service and do not have enough RRSP room available to do so, contact CRA to find out if you are eligible.

If your PSPA is not approved by CRA and you are not able to make a qualifying withdrawal or qualifying transfer, you cannot buy the service.