Generally, anyone can make a $2K over contribution to their RRSP (unless you are under 18 I believe). However, if you don't have any RRSP room, you can't deduct it. The over contribution will stay on file with CRA to carry forward to a future year when new room "opens up" (assuming they are still working or creating RRSP room via another means).
The $2K will be tax sheltered along the way which is good. However, if new room never opens up (if they are no longer working for example), they will still be taxed when they eventually withdraw the funds; unless you meet one of two exceptions. 1) If you meet certain conditions you can take an offsetting deduction on your tax return or 2) If you qualify, you can fill out a special form to withdraw the funds without the institution withholding tax.
If you don't meet one of the exceptions, you will end up paying tax on the $2K for which you never had the benefit of a deduction. In other words, you will be doubled taxed.
In summary, unless you have new room that will "open up" in the future, I don't see the point of doing this. It's a lot of hassle just to get an extra $2K of tax sheltered growth with the potential to be taxed on this income when it's withdrawn without the benefit of a deduction. If they have TFSA room, I would just recommend investing the $2K in that.
People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:
Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.