Carry-forward room is unused contribution room in registered accounts like RRSPs, TFSAs, or FHSAs that can be used in future years. It allows savers to catch up on contributions they couldn’t make earlier.
How It Works
For RRSPs, if you don’t contribute the maximum allowed in one year, the remaining room is carried forward indefinitely. For TFSAs, any unused room is added to the following year. This flexibility helps savers maximize tax benefits over time.
Why It Matters
- Flexibility: Allows contributions to be made later when income or savings capacity increases.
- Tax efficiency: Lets savers maximize deductions (RRSP) or tax-free growth (TFSA/FHSA).
Final Thoughts
Carry-forward room is a valuable feature of registered accounts. It provides flexibility for people who cannot maximize contributions every year but still want to take advantage of long-term tax benefits.