Based on the provided financial data, how much can the individual contribute to an RRSP for the 2020 tax year?

To determine the amount an individual can contribute to a Registered Retirement Savings Plan (RRSP) for the 2020 tax year, it’s crucial to understand the contribution limits that apply. For 2020, the RRSP contribution limit is determined based on 18% of the individual’s earned income from the previous year, up to a maximum dollar limit set by the Canada Revenue Agency (CRA).

In 2020, the maximum allowable contribution limit was set at $27,230. However, if the individual’s income for the previous year was relatively low, the maximum RRSP contribution might not reach this limit. The contribution room accumulates over the years, meaning any unused contribution room from prior years can also be added.

In this scenario, the correct choice of $6,020 aligns with the contribution limits applied to individuals with a lower income threshold or at those with specific deductions that may reduce their available contribution room. This suggests that the individual’s earned income for the previous year fell within a range that justifies this amount, particularly in relation to other financial factors such as pension adjustments or other retirement plans they may be participating in.

Thus, understanding the specifics of how earned income, contribution limits, and potential adjustments like pension adjustments factor into calculating