There are many advantages of group RRSPs for your business. As a follow up to our recent article on Deferred Profit Sharing Plans (DPSPs), we want to discuss the power of group retirement plans to give you the competitive edge in the job market.
Whereas DPSPs only allow contributions from the employer, group RRSPs allow contributions from the employee as well. Your employees can contribute to the group RRSP and you as the business owner can match contributions which are deposited into a DPSP. Allowing both you and your employees to take advantage of the tax savings afforded by both plans.
In addition to the advantages of group RRSPs for your business, your employees receive many benefits as well. Some of these include:
- Group RRSPs are deducted from their gross income, allowing them to save on their annual income tax bill. You will see immediate tax savings in your tax return.
- Gives your employees a disciplined approach to saving that results in less fees than a personal plan.
- Most plans allow you to make spousal contributions as well, a great tax savings tool for your employee’s family.
A group RRSP is a free benefit you can provide for your employees. It allows them to take advantage of group buying power and shows them you have a vested interest in their retirement. It’s a no-brainer for the employee, but here are some advantages of group RRPSs for your business:
- Group RRSPs are much more cost effective and easier to administrate than a traditional pension plan.
- The business owner is not liable for guaranteeing a specific amount of income when an employee retires, unlike a traditional pension plan.
- The bulk of the administration duties are the responsibility of the group RRSP provider, rather than adding to your existing administration duties.
A Group RRSP is an excellent retirement savings tool that can easily and cost-effectively be provided by any small to medium business owner. If you are looking to upgrade your employee benefits package and take a vested interest in the long-term success of your employees, we encourage you to contact DENT Benefits today!
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.