Group RSP

 Registered Retirement Savings Plan

This an employer-sponsored retirement savings plan, similar to an individual RRSP, but administered on a group basis by the employer.

Contributions are made by pay-roll deduction, on a pre-tax basis, through a Group RRSP administrator. Employee contributions are often matched by the employer (typically to a maximum of 3-5% of earnings). However, contributions by the employer are not mandatory. Contributions by the employer are taxable as income to the employee.

Advantages of a group RRSP compared to an individual RRSP:

• Payroll Deductions method of employee contributions
• Immediate tax relief to employee
• Smaller or no administrative costs
• Minimal government reporting
• Not subject to provincial pension regulations, therefore flexible in terms of employee eligibility and contribution levels
• Lower minimum deposits
• Income splitting is available through spousal contributions
• May offer enhanced RRIF and annuity rates at retirement

 
Disadvantages of a group RRSP compared to an individual RRSP:

• Group plan may have limited investment options
• Employer contributions are a taxable benefit to employees
• Plan may be cancelled at any time by employer
• Employer may limit an employee’s ability to withdraw funds