Planning for Success in Retirement

THUNDER BAY – Money – If you are an employee and your employer offers a group RRSP, or you are a business owner deciding whether or not to implement a group RRSP for your employees, I’ll provide some facts that you may not have already known.  All of us should contribute to individual RRSPs at some point, but there are many benefits to group RRSPs should they be available to you.

What is a Group RRSP?

Much like a RRSP, a group RRSP is a grouping of individual plans with centralized administration.  The benefit with grouping these plans is that it allows the ability to accumulate retirement savings at lower administration costs.

If you are an employee, it will allow your employer to make contributions in your name.  As an employer, it could be a great way to retain staff and a way to pay income and bonuses.

What are the advantages for employers?

In the case of an employer, a group RRSP offers minimal legal requirements as compared to a pension plan.  These plans are easier to administer with there being no need to calculate or report pension adjustments.  There’s no minimum on how much to contribute, and flexibility on when you’re able to contribute to these plans.

For employers, they’re easy to explain to employees and are a great way to retain staff for the long term.

What are the advantages for employees?

Employees will benefit from an immediate tax break, as contributions are deducted from their gross earnings.  This will allow for easier savings for most, as the contributions are deducted at source.  There is no minimum contribution amount, and participants are able to contribute to a spouse’s RRSP.

Employees will also experience lower fund fees which is a big win, as it could save participants thousands in the long term.

The Bottom Line

Consult with a professional to decide if a group RRSP is right for you.  For employers, it may depend on how many employees you have and the type of business you’re in.  For employees, if a plan like this is offered to you, it is definitely something worth looking into.  If you should have any other questions regarding  group RRSPs, I invite you to contact me at your earliest convenience through my contact information below.

If you would like to sign up for my free monthly investment newsletter, feel free to email me at anthony.talarico@f55f.com with your name and email.

Anthony M. Talarico