REGISTERED RETIREMENT SAVINGS PLANS (RRSPs)
A Group Registered Retirement Savings Plan, or Group RRSP, is an employer-sponsored, government regulated retirement savings plan, similar to an individual RRSP, but administered on a group basis by the employer.
Employer and Plan members' contributions are made by payroll deduction on a pre-tax basis. The contributions are deposited into the plan member's individual RRSP and invested as per his/her request.
The maximum contribution is determined by Revenue Canada. Depending upon the Group RRSP the employer may match the employee contributions; however contributions made by the employer are taxable as income to the employee.
A Group RRSP provides many advantages. It makes it very easy for plan members to save for their retirement. Payroll deductions provide an immediate tax benefit to the plan member. The investments may be controlled by the plan member. The amounts invested in a Group RRSP can be withdrawn at any time unless the withdrawals are limited under the contract. Group RRSPs are very flexible in how the money is received at retirement with the plan member having the option of taking the money as cash, purchasing a life annuity, purchasing a fixed term annuity, or purchasing a Registered Retirement Income Fund (RRIF). Income splitting is available through spousal contributions and Group RRSP Plans may offer enhanced RRIF and annuity rates at retirement. Group RRSPs provide benefits not only to the plan members but to employers as well. They offer complete design flexibility and are simpler to administer than most other plans.
The amount of retirement income the plan member will derive from a Group RRSP will depend upon the amount that the plan member contributed, the amount that the employer contributed, and how well the investments performed.
RRSP's are protected in the event of a plan member's bankruptcy.
Contact the Blevins Team for more information.
