How much over-contribution will Celeste incur after contributing $10,000 to her RRSP?

To determine Celeste's over-contribution to her Registered Retirement Savings Plan (RRSP), you need to understand the rules governing contributions. In Canada, individuals can contribute up to 18% of their previous year's earned income, up to a specified limit (which was $30,780 for 2023). In addition, a lifetime over-contribution allowance of $2,000 is provided.

Here's how the calculation works:

1. Identify the contribution limit, which is based on Celeste's earned income.

2. Calculate the contribution she is allowed to make without penalty.

3. After determining her maximum allowable contribution, assess her actual contribution of $10,000.

4. Subtract the total allowable contribution (including the over-contribution limit) from her actual contribution to find the excess.

Once you've determined the allowable contributions and considered the $2,000 over-contribution allowance, you calculate the potential penalties for any excess contribution. In Canada, this penalty is 1% per month for any contributions exceeding the allowable amount (inclusive of the over-contribution limit).

In this scenario, if Celeste has contributed $10,000 and we assume her calculated limit (after factoring in her $2,000 over-contribution allowance) is, for