How much of Emily's retiring allowance can she rollover into her RRSP?

To determine how much of Emily's retiring allowance can be rolled over into her Registered Retirement Savings Plan (RRSP), it's essential to understand the rules surrounding retiring allowances and RRSP contributions in Canada. A retiring allowance generally includes any severance pay received upon termination and any amounts for unused sick leave.

The rollover provision allows individuals to transfer a portion of their retiring allowance to an RRSP on a tax-deferred basis, subject to certain limits. Specifically, taxpayers can roll over amounts that relate to service before 1996, which are typically referenced in a maximum limit. That limit is often adjusted according to indexes, but a common figure is associated with the maximum allowed for those working in certain years.

In this scenario, if it is established that Emily’s retiring allowance, derived from her taxable benefits and employment duration, qualifies her for a rollover amount of $26,500, this indicates that any amounts exceeding this figure would either not qualify for rollover or would be subject to tax implications.

The other values provided (such as $26,000, $27,000, and $28,000) do not match the approved rollover amount of $26,500, thus making it clear that this figure represents the maximum tax-free contribution allowed under her RRSP