GROUP RRSP

PROVIDE A RETIREMENT PLAN FOR EMPLOYEES

Provide your employees a group RRSP plan! As an employer, you can help your employees save for their retirement by having a group RRSP. As an employee, you can open an individual RRSP, but the employer contributes to your personal RRSP through the Group RRSP plan. The RRSPs of all of the employees are held in one financial institution. Here’s how it works:

  • The plan contributions are automatic and deducted from your pay. The employer can match or add to your RRSP contributions.
  • The employer usually pays the costs of opening the RRSP plan and the employee pays any investment costs.
  • The range of investment options is usually limited.
  • The rules for when and how much money can be taken out vary depending on your employer.

 

GROUP RRSP ADVANTAGES

  1. Automatic payroll deductions of employee contributions
  2. Tax relief for employee
  3. Offers enhanced RRIF and annuity rates when retiring
  4. Little to no administration cost
  5. Available income splitting contributions for spouse’s
  6. Minimal reporting from Canadian Government
  7. Low deposits
  8. Not subject to provincial regulations, group RRSP’s are flexible in terms of employee eligibility and employee contribution levels.

INDIVIDUAL RRSP ADVANTAGES

  1. Investment options through group RRSP plans can be limited.
  2. Group RRSP employer contributions are taxable as employee based benefits.
  3. There can be group RRSP limitations, setting how much and when funds can be withdrawn by the employee.
  4. The employer can cancel the group RRSP plan at anytime

IS A GROUP RRSP FOR YOU?

Group Registered Retirement Savings Plans (RRSP) are an employer-sponsored savings plan, that helps set up employees for retirement. Contributions are often made through payroll deductions , set up on a pre-tax basis. Though not mandatory, contributions made to the RRSP  by the Employee are usually matched by the employer (to a set maximum of usually 3-5% of earnings). Employer contributions are registered as taxable income to the employee but remain tax-free income and investment on behalf of the employee. Members of a Group RRSP are not generally permitted to purchase individual securities like they are through an individual RRSP.

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ABOUT GROUP RRSP

  1. Group RRSP are designed and set-up to encourage employees to save for retirement through contributions and payroll deductions.
  2. Both the employee and the employer can make contributions to the RRSP.
  3. All contributions Group RRSP’s are tax-deductible for the employee and all earnings are tax-exempt.
  4. Group RRSP’s allow the employee to decide how much and when money is invested. The employer provides a variety of investments to choose from. Group RRSP’s often have fewer investment choices than  individual RRSP.

GROUP RRSP WHEN YOU LEAVE

Have you been paying into a group RRSP and considering leaving or have left the prior employer? Don’t Worry!

If you own a Group RRSP the money is not locked. Once an employee leaves a company they have a number of options to collect the money owed the Group RRSP, money can be:

  • transferred to an individual RRSP
  • used to buy an annuity
  • taken in cash and taxed