What is the maximum contribution room for RRSPs for the 2020 tax year based on the given example?

For the 2020 tax year, the maximum contribution room for Registered Retirement Savings Plans (RRSPs) was established as $27,230. This figure is important because it represents the highest amount that individuals can contribute to their RRSPs for the tax year without incurring penalties. The limit is adjusted annually, taking into account inflation and the individual's previous year's earned income.

In determining this amount, the calculation typically starts with a percentage of the individual's earned income from the previous year and incorporates any unused contribution room from prior years, if applicable. The contributions made to an RRSP are beneficial as they are tax-deferred, providing individuals with the potential for tax savings during their working years while allowing their investments to grow.

The other amounts listed represent either previous years' limits or hypothetical figures, but they do not align with the actual contribution limit set for the 2020 tax year. This makes $27,230 the correct answer, as it accurately reflects the maximum allowable contribution for RRSPs in that period.