Group RRSP (group registered retirement savings plan)

The CRA describes a registered retirement savings plan as a savings plan that you establish, that the CRA registers, and to which you or your spouse or common-law partner contribute. A group program is a way of offering such plans through the workplace. A buyer meets it in diligence, when the seller’s staff benefits are reviewed. See what happens to the pension or benefits plan.

How the CRA treats employer contributions

The CRA’s payroll chart says contributions are cash benefits if the employee can withdraw the amounts from a group RRSP before retiring or ceasing to be employed, except withdrawals under the Home Buyers’ Plan or Lifelong Learning Plan. They are non-cash benefits only if the employee cannot. The chart sets CPP and EI treatment for each case, and says not to deduct income tax on contributions where the employer has reasonable grounds to believe the employee can deduct them for the year. It is separate from a registered pension plan.

What to ask the seller

• Who the plan provider is and whether the contract can be assigned or ended
• Whether employer contributions are promised in contracts or are discretionary
• Whether any contributions are unpaid at closing