Deferred Profit Sharing Plans (DPSP)

Many companies offer their employees Deferred Profit Sharing Plans. Contributions to the plan can be set by a wide variety of formulas. The DPSP is very similar to an RRSP, with the only major difference being that the DPSP contributions reduce RRSP room a year later, allowing you higher RRSP contribution amounts this year.

	RRSP	DPSP
Tax on growth	no	no
Investments	any	any
Withdrawals	taxed	taxed
Retirement	RIF, annuity	Xfer to RRSP RIF, annuity
Employer contributions as income on T4	yes	no
EI & CPP Deductions	yes	no
Receipt	yes	no , included in PA
Lowers RRSP room	same year	next year

Then Why The DPSP?

• DPSP only reduces your RRSP room following year (allows full RRSP contribution for current year), the reduction shows up as a Pension Adjustment (PA) on your employer's T4
• Employer money kept separate (many plans may have a withdrawal restriction while employed - see your plan's details)
• Employer saves payroll taxes & you don't pay EI & CPP on contribution (if you make under $44,900)
   

For the forms required to open a ScotiaMcLeod DPSP account (if you are part of an employer plan offering DPSPs), click here.