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Group Registered Retirement Savings Plans
Group Registered Retirement Savings Plans
A Group RRSP is a collection of individual RRSP accounts, registered
with the Canada Customs and Revenue Agency (CCRA), connected to
one employer. Each employee establishes their own individual RRSP
that can be contributed to through employee and/or employer deposits.
Employees receive tax deductions for their own contributions. Alternatively,
for payroll deduction contributions, companies can apply for employees
to receive immediate tax relief on contributions deducted at source.
What are the key attributes of a Group RRSP?
It’s a low-cost program for an employer to sponsor.
All employer contributions are tax-deductible.
There is no minimum required employer contribution.
The employer can determine the terms and conditions of any matching
program.
Contributions are not added to members’ earnings and do not
increase payroll taxes.
Income appreciates on a tax-free basis until the funds are withdrawn.
Spousal plans are permitted.
Investment options are varied and flexible.
Who is eligible for membership in the plan?
Requirements for plan eligibility, frequency of contributions and
amount of contributions are up to the employer. The employer may
also require that employees contribute a basic amount.
How does the plan work?
In a Group RRSP, employees may contribute directly through payroll
deduction. When employees or their employer contribute funds directly
to the RRSP, no income tax is withheld at source, so there is an
immediate tax benefit.
Purchases other than payroll-deducted contributions may also be
permitted (for example, bonuses or vacation pay), and employees
may make contributions to their plans at any time.
Is there a vesting period?
A vesting period is the amount of time an employee must be a member
of a plan before earning the right to the employer’s contributions.
In a Group RRSP, employer contributions into employee accounts are
vested immediately, which means the employee has immediate ownership
of those contributions. If an employee leaves the company, they
are able to take their RRSP with them.
What effect do contributions to a Group RRSP have on the
employee’s contribution room in their own RRSPs?
The total contributions of both the employer and employee cannot
exceed the employee’s RRSP contribution limit as reported
on the their CCRA Notice of Assessment for the previous calendar
year.
For more information, email
us or contact us at 1-866-927-0111
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