Path: utzoo!ncc!alberta!watmath!utgpu!tmsoft!ead
From: ead@tmsoft.UUCP (Elizabeth Doucette)
Newsgroups: can.general
Subject: Effect of Pension Plan on RRSP contribution limits
Message-ID: <284@tmsoft.UUCP>
Date: 6 Mar 88 03:31:25 GMT
References: <5464@watdragon.waterloo.edu> <15565@onfcanim.UUCP> <118@edson.UUCP>
Sender: ead@tmsoft.UUCP
Reply-To: ead@tmsoft.UUCP (Elizabeth Doucette)
Distribution: can
Organization: EAD MoneyHealth Inc.
Lines: 39

In article <118@edson.UUCP> doug@edson.UUCP (Doug Konrad) writes:
:1) Deferred Benefit Plans:   You contribute, and your company contributes.
Defined Benefit Plans
:		When you retire, you pension reflects your income during your
:		last 5 years (typically) of employment. Your pension is NOT
:		really linked to how much you contribute. If there is a shortage
:		in the plan, your employer has to pay.
:
:2) Money Purchase Plans:   You contribute, and your company contributes. When
:		you retire, the trustees of the pension plan take this pot of
:		money which has accumulated over your employment, and buy an
:		annuity. The annuity income is your pension.
:
:Now to the tax law...
:
:If you are a member of a deferred benefit plan, the lower RRSP contribution
:limit applies. Presumably, this is because deferred benefit plans give you
:inherent protection from inflation until retirement (and occaisonally, after).
:
:If you are a member of a money purchase plan, the $7,500 limit applies, less
:the contributions you make to the plan. Money purchase plans are definitely
:poorer than deferred benefit plans (unless you expect 40 years of deflation).
:This higher limit helps to compensate.

My understanding of section 146(5)(a)(i) of the income tax act is that
there is no distinction between different types of pension plans, with
regard to RRSP contribution limits. 

The section discusses who makes contributions to the pension plan.
Paraphrased, this section states that if a contribution is made to a
taxpayer's pension plan by a person other than the taxpayer, then the
lower limit applies. 

No distinctions between different types of pension plans are made.
Given the above definition of Money Purchase Plan, (you and the company
contribute), it follows that the $3,500 limit applies.

If you disagree with this interpretation, I would appreciate finding
out the section of the Income Tax Act that applies.