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.

 



Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiamcleod.com
    allan.mcglade@scotiamcleod.com

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