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Make the Maximum Contribution
You are generally best off making a full RSP contribution, even if you have to borrow.
This formula will help you calculate what your maximum contribution could be, based on the amount of cash you have available:
Say your marginal tax rate is 50% and you have $3,000 of available cash. You could borrow another $3,000 and contribute $6,000 to your RSP. Then, use the resulting $3,000 tax refund to pay back your loan. Interest on an RSP loan is not tax-deductible, but the RSP’s other advantages will generally more than compensate for the interest cost.
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How Much? – a Simple Formula
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How much can you afford to contribute?
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Available cash
100 % – (your marginal tax rate)
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