Group Plans frequently asked questions

No, an employer health spending account is funded by the employer and the cost deducted before tax. This is an account that sets aside money for dental, medical, etc. expenses that the employee can tap into. If the health spending account is not fully used it moves over to the next year.

Yes, a DPSP can be opened to allow the employer to share its profits with employees without having to open a group RRSP or group TFSA. A common practice is for employers to invest year end and regular bonuses in the DPSP. Remember, a DPSP only allows employer contributions. Please note: in the Province of Quebec, Bill 39 does not recognize the DPSP as a voluntary retirement savings plan (VRSP).

No, vested DPSP funds are treated like RRSPs. Locked-in is a term for required pension contributions.

A pension adjustment occurs when an employee becomes a member of a DPSP or a registered pension plan, as well as an employer’s contributions to a VRSP in the Province of Québec.

The pension adjustment (PA):

• Reduces the RRSP contribution limit the following year.
• Is equal to the employer contribution into the DPSP, the DCRPP or VRSP in that year.
• Is recorded on the employee’s T4 by the employer.

A pension adjustment reversal (PAR):

•  Is given to an employee who has left a company and the payments made to the DPSP on their behalf are not vested by the employee.
•  Restores the employee’s RRSP contribution limit.

Vesting is the period of time in which an employee must work for an employer, or be a member of a DPSP or DCRPP, in order to be fully entitled to the employer contribution amount. The maximum vesting period is 24 months for the DPSP. Most pensions (DCRPP and DBPP) in Canada have immediate vesting.

The partition of the family patrimony does not apply to DPSP. In case of divorce, we must rely on the terms of the plan and the wish of the ex-spouse to carry out any sharing.

To learn more about the Quebec civil code regarding family patrimony, click here.

There are numerous reports available including a group summary report. For more information, contact our Group Plan Support team.

Reports are available on request by contacting our Group Plan Support team.

Yes, there are two ways to send employer contributions:

• Electronic funds transfer (EFT)
• Interactive voice response (IVR)

Please contact your Group Plan Sales team or Group Plan Support for our Cash Consolidated Plan (CCP) Form and details.

To indicate a permanent change, you must enter a small “p” next to the new amount in the Revised column. Otherwise, the amount indicated will come back the following month. There may be a small delay before the change appears on future contribution lists.

It is preferable to provide two separate lists to avoid any errors. If only one list is used, the group RRSP account numbers must be provided for the employee’s contribution and the DPSP account number for the employer’s contribution.

Yes, because it’s important to separate the group RRSP amount that employees pay into their account and the employer’s payment that is made into the DPSP.

DPSP payments are made according to company policy. They can be sent at the same time as the group RRSP, however it must be separated from the Group RRSP contributions to avoid potential errors. For the DPSP deduction to apply to the plan sponsor’s current tax year, it must be made within 120 days of the calendar year end.

The DPSP contribution appears on the employee’s T4 in box 52. The amount received represents the pension adjustment, which reduces the RRSP contribution limit for the following year.

Group RRSP: 18% of the previous year’s income. DPSP: lesser of 18% of current income or half of the current Annual Defined Contribution limit. There is no first 60 days contribution window for DPSPs.

One of the most interesting factors that account for the popularity of the DPSP is its great flexibility. In fact, employers set the rules for their DPSP.

The employer’s contribution depends on the company’s earnings (annual or retained). Therefore, in a year when earnings are lower, a company can reduce its contribution to employees, or even cancel it in case of a financial loss. Conversely, in an exceptional year, a company could increase its contribution.

This particular feature of the DPSP is an undeniable advantage for companies. That way, in difficult times, companies can have some respite and avoid greater losses. When a company is realizing profits, it will be able to reward its employees in a way that is tax-efficient for everyone.

Yes, the amount paid to the employee must appear in box 52 of the T4 as a Pension Adjustment. Mackenzie will issue a Rectified Pension Adjustment that will cancel the amount.

Employer contributions to the group RRSP are subject to CPP/QPP and EI, WSIB and EHT (applicable in some provinces).

For Quebec residents only: If the employee cannot withdraw funds prior to retirement or termination of employment, or if the employee is allowed to withdraw funds from the RRSP under the HBP or LLP, the employer contribution is not subject to Québec Parental Insurance Plan (QPIP).

Yes, the employer can grant rights to an employee and allow the transfer to the RRSP in order to benefit from the Home Buyers’ Plan. The 89-day rule would still apply.

No, unless this is the company’s policy. Company policy may state that if an employee continues to contribute, then the employer would also do so.

Generally, you would not be able to deduct contributions you made to a Registered Retirement Savings Plan (RRSP) in the first year that you will be filing a tax return in Canada.

However, if you filed a tax return in Canada for any tax year from 1990 to 2019, you may be able to claim a deduction for RRSP contributions you made for the current year. The CRA bases the maximum amount you can deduct on certain types of income you earned in earlier years.

To learn more, click here.

No, only employers can make contributions to the DPSP. Employees would contribute to a GRSP/group TFSA.

No, but if the DPSP allows, the DPSP can be transferred to the RRSP and then used for HBP or LLP, provided that the monies have been in the DPSP for a minimum of 90 days.

es, but the money is already considered registered and counts the moment the money was invested into the DPSP.

No, because it’s not part of the payroll. Amounts are paid to employees from the company’s profits and carried forward as the employee’s T4 Pension Adjustment at year-end.

Group Plan Support

Tel: 1 (800) 665-0513

Fax: 1 (866) 766-6623

groupadmin@mackenzieinvestments.com